You are Janet Wilt, CPA.The president of one of your clients, Boarshead Corporation, emailed you the following message:Janet,I was at a conference today and they were talking about some new lease regulations and how that may impact our financial statements.I know that we have a couple of leases, one that we record as a liabilityand one that we do not.How will this new lease requirement impact us?When does this go into effect?Will we need to restate prior financial statements?Are there any retrospective entries that we have to make?If so, what are they and when do we need to record them?What do we need to do to implement this change?Don ColliziPresident, Boarshead CorporationUpon investigation of Boarshead's records, you found that Boarshead had had two leases.One that is currently being accounted for as a capital lease and one being treated as an operating lease (under current standards).The capital lease was for equipment. The lease started in 2017 and was a 5-year lease of annual lease payments of $50,000, starting on January 1, 2017. The lease also had a bargain purchase option for $20,000 at the end of the lease.The equipment had a useful life of 6 years and Boarshead uses the straight-line method of depreciation.The implicit interest rate for this lease was 6%.The operating lease was a 15-year lease for their facilities that started on January 1, 2015.The lease consisted of annual rental payments, starting on January 1, 2015 of $60,000.When they started the lease in 2015, the expected useful life of the facility was 30 years.Boarshead imputed interest rate is 8%.Required

2.Assuming that Boarshead adopt ASU 2016-2 in 2019, what liabilities and assets will need to be reported in the 2018 and 2019 comparative financial statements.

3.Assuming adoption in 2019, what journal entries will need to be made in 2019 for the transition to the new lease standard?

4.Assuming adoption in 2019, what are the new year-end (December 31, 2019) adjusting entries that will need to be made?