The following facts pertain to a non-cancelable lease agreement between Faldo Leasing Company and Sunland Company, a lessee.

Commencement dateJanuary 1,Annual lease payment due at the beginning of

each year, beginning with January 1,$119,072Residual value of equipment at end of lease term,

guaranteed by the lessee$50,000Expected residual value of equipment at end of lease term$45,000Lease term6yearsEconomic life of leased equipment6yearsFair value of asset at January 1,$626,000Lessor's implicit rate8%Lessee's incremental borrowing rate8%

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.

I have completed the amortization schedule for the lessee and the journal entries for the first 2 years. I just don't understand what this lats part is asking.

Suppose Sunland 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?

and

What if Sunland prepaid rent of $5,000 to Faldo?