The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Pearl Company, a lessee. Commencement date January 1, Annual lease payment due at the beginning of each year, beginning with January 1, $110,269 Residual value of equipment at end of lease term, guaranteed by the lessee $46,000 Expected residual value of equipment at end of lease term $41,000 Lease term 6 years Economic life of leased equipment 6 years Fair value of asset at January 1, $622,000 Lessor's implicit rate 5 % Lessee's incremental borrowing rate 5 % 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. Suppose Pearl received a lease incentive of $5,000 from Faldo Leasing to enter the lease. How would the initial measurement of the lease liability and right-of-use asset be affected? Right-of-use asset $ Lease Liability What if Pearl prepaid rent of $5,000 to Faldo? Right-of-use asset $ Lease Liability $