The following facts pertain to a non$-$cancelable lease agreement between Blossom Leasing Company and Wildhorse Company, a lessee.

Commencement date

Annual lease payment due at the beginning of each year, beginning with January $1,2025$

Residual value of equipment at end of lease term, guaranteed by the lessee

Expected residual value of equipment at end of lease term

Lease term

Economic life of leased equipment

Fair value of asset at January $1,2025$

Lessor's implicit rate

Lessee's incremental borrowing rate

January $1,2025$

$$126,840$

$$55,000$

$$50,000$

$6$ years

$6$ years

$$653,000$

$9\%$

$9\%$

The asset will revert to the lessor at the end of the lease term. The lessee uses the straight$-$line amortization for all leased equipment.

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Prepare an amortization schedule that would be suitable for the lessee for the lease term. $($Round present value factor calculations to $5$ decimal places, e$.$g$.1\mathrm{.}25124$ and the final answers to $0$ decimal places e$.$g$.5,275.)$

Prepare all of the journal entries for the lessee for $2025$ and $2026$ to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee's annual accounting period ends on December $31.($Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account titles and enter $0$ for the amounts. Round answers to $0$ decimal places e$.$g$.5,275.$ Record journal entries in the order presented in the problem. List all debit entries before credit entries.$)$

Date

Account Titles and Explanation

Debit

Credit

$($To record the lease.$)$

$($To record first lease payment.$)$

$($To record interest.$)$

$($To record amortization.$)$

$($To record interest.$)$

$($To record amortization.$)$

Your answer is incorrect.

Suppose Wildhorse received a lease incentive of $$5,000$ from Blossom Leasing to enter the lease. What will be the initial measurements of the lease liability and right$-$of$-$use asset?

Right$-$of$-$use asset $

Lease liability $

What if Wildhorse prepaid rent of $$5,000$ to Blossom?

Right$-$of$-$use asset $

Lease liability

$