TPP Corp agrees on Jan $1,2025,$ to lease equipment from Trane, Inc. for $3$ years. The lease calls for annual lease payments of $$18,000$ at the beginning of each year. The lease does not transfer ownership, nor does it contain a bargain purchase option, and is not a specialized asset. In addition, the useful life of the equipment is $10$ years, and the present value of the lease payments is less than $90\%$ of the fair value of the equipment.

Prepare TPP$\text{'}$s journal entries on Jan $1,2025($commencement of the operating lease$),$and on Dec $31,2025.$ Assume the implicit rate used by the lessor is unknown, and TPP$\text{'}$s incremental borrowing rate is $8\%.$

$($to record lease liability $-2$ slots$)$

$($to record lease payment $-2$ slots$)$

$($other $-3$ slots$)$