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

Commencement date		January 1, 2017
Annual lease payment due at the beginning of each year, beginning with January 1, 2017		$116,406
Residual value of equipment at end of lease term, guaranteed by the lessee		$50,000
Expected residual value of equipment at end of lease term		$45,000
Lease term		6	years
Economic life of leased equipment		6	years
Fair value of asset at January 1, 2017		$642,000
Lessors implicit rate		6	%
Lessees incremental borrowing rate		6	%

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. Click here to view the factor table.

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. 1.25124 and the final answers to 0 decimal places e.g. 5,275.)

VANCE COMPANY (Lessee) Lease Amortization Schedule
Date		Annual Lease Payment Plus GRV		Interest on Liability		Reduction of Lease Liability		Lease Liability
1/1/17		$

$

$

		$
1/1/17

1/1/18
1/1/19
1/1/20
1/1/21
1/1/22
12/31/22
		$		$		$

Prepare all of the journal entries for the lessee for 2017 and 2018 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessees 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.)

Date	Account Titles and Explanation	Debit	Credit

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

	(To record interest.)
	(To record amortization.)

	(To reverse the December 31 entry.)
	(To record the second lease payment.)

	(To record interest.)
	(To record amortization.)

Suppose Vance 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

$

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

Right-of-use asset

$