Tapas Corporation has leased a piece of equipment that has a usefull life of 12 years. The terms of the lease are payments of $43,000 per year for 12 years. Tapas currently is able to borrow money at a long-term interest rate of 8 percent.

1. Calculate the present value of the lease.

2. Prepare the entry in journal form the record the lease agreement.

3. Prepare the entry in journal for to record depreciation of the equipment for the first year using the straight-line method.

4. Prepare the entries in journal form to record the lease payments for the first two years.