Terms of a lease agreement and related facts were:

a. Leased asset had a retail cash selling price of $100,000. Its useful life was six years with no residual value (straight-line depreciation).

b. Annual lease payments at the beginning of each year were $20,873, beginning January 1.

c. Lessor's implicit rate when calculating annual rental payments was 10%.

d. Costs of negotiating and consummating the completed lease transaction incurred by the lessor were $2,062.

e. Collectibility of the lease payments by the lessor was reasonably predictable and there were no costs to the lessor that were yet to be incurred.

Required:

Prepare the appropriate entries for the lessor to record the lease, the initial payment at its inception, and at the December 31 fiscal year-end under each of the following three independent assumptions:

1. The lease term is three years and the lessor paid $100,000 to acquire the asset (operating lease).

2. The lease term is six years and the lessor paid $100,000 to acquire the asset (direct financing lease). Also assume that adjusting the net investment by initial direct costs reduces the effective rate of interest to 9%.

3. The lease term is six years and the lessor paid $85,000 to acquire the asset (sales-type lease).