The Ball Watch Company of Canada signed a 10-year lease on January 2, 2023 for its state-of-the-art watch manufacturing equipment. Annual rental payments are $1,000,000 each January 2, starting January 2, 2023. The interest rate implicit in the lease is 6%, while BWCC has an incremental borrowing rate of 7%. An appraisal showed the equipment was worth $7,802,000 at the time the lease was signed. The equipment's economic life is estimated to be 10 years, with a zero-residual value. BWCC uses the straight-line method of depreciation. The only entry made in 2023 for the lease was for the payment made on January 2, 2023. ACCOUNT Rental expense on leased asset Cash (To record the first lease payment on January 2, 2023) DEBIT CREDIT 1,000,000 1,000,000