The following relate to an operating lease agreement:
- The lease term is 3 years, beginning January 1, 2018.
- The leased asset cost the lessor $850,000 and had a useful lifeof eight years with no residual value. The lessor usesstraight-line depreciation for its depreciable assets.
- Annual lease payments at the beginning of each year were$144,500.
- Incremental costs of negotiating costs of negotiating andconsummating the completed lease transaction incurred by the lessorwere $3,150.
Required:
Prepare the appropriate entries for the lessor from the beginningof the lease through the end of the lease term. (Round yourintermediate and final answers to the nearest whole dollar amount.If no entry is required for a transaction/event, select "No journalentry required" in the first account field.)
1. Record the cash received. (Jan 1, 2018)
2. Record the payment of initial direct costs. (Jan 1, 2018)
3. Record the cost of the lease. (Dec 31, 2018)
4. Record the depreciation expense. (Dec 31, 2018)
5. Record the rent revenue. (Dec 31, 2018)
6. Record the cash received. (Jan 1, 2019)
7. Record the cost of the lease. (Dec 31, 2019)
8. Record the depreciation expense. (Dec 31, 2019)
9. Record the rent revenue. (Dec 31, 2019)
10. Record the cash received. (Jan 1, 2020)
11. Record the cost of the lease. (Dec 31, 2020)
12. Record the depreciation expense. (Dec 31, 2020)
13. Record the rent revenue. (Dec 31, 2020)
