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The City of Clear Lake signed a lease agreement with Mountainside Builders whereby Mountainside will...

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Accounting

The City of Clear Lake signed a lease agreement with Mountainside Builders whereby Mountainside will construct a new office building for city administrative use and lease it to the City for 30 years. The City has agreed to make an initial payment of $822,441 and annual payments in the same amount for the next 29 years. At a 6 percent discount rate, the present value of the lease payments totals $12 million. Upon completion, the building had an appraised value of $13 million and an estimated useful life of 40 years.
Required
a. Provide the journal entries the city should make in both the capital projects fund general journal and the governmental activities general journal to record the lease at the date of inception. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in whole dollars, not in millions.)
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