What would be the appropriate journal entry/entries associated with this issue? Assumptions are that this scenario takes place in the U.S. instead of Canada, and therefore, GAAP rules would apply. GAAP references are also required for the entry, as well.

1. VP entered into a lease for its new building in Ottawa on January 1, 2012, and the lease agreement is for 25 years. The building is expected to last 40 years, and VP has an option to acquire the building at a price of $300,000 at the end of the lease. VP makes annual lease payments of $36,500 at the start of each year, not including executory costs of $1,000 per year that are being paid by the lessor, McGruder Leasing. As of January, 2012, the build- ing had a fair value of $350,000 (fair value was $330,000 as of July 1, 2011 when negotiations with the lessor began). 1. VP entered into a lease for its new building in Ottawa on January 1, 2012, and the lease agreement is for 25 years. The building is expected to last 40 years, and VP has an option to acquire the building at a price of $300,000 at the end of the lease. VP makes annual lease payments of $36,500 at the start of each year, not including executory costs of $1,000 per year that are being paid by the lessor, McGruder Leasing. As of January, 2012, the build- ing had a fair value of $350,000 (fair value was $330,000 as of July 1, 2011 when negotiations with the lessor began)