On January 1,2011,Granite Company entered a lease to rent office space.The lease requires $350,000 per year,at the beginning of each year,for 20 years.The lease is non-cancellable and non-renewable.The building's estimated useful life is 30 years,and its current fair value is estimated to be $6 million.The incremental borrowing rate is 5%.
Requirement:
Classify this lease and record the journal entries for the first year of the lease.

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The Answer of On January 1,2011,Granite Company entered a lease to rent office space.The lease requires $350,000 per year,at the beginning of each year,for 20 years.The lease is non-cancellable and non-renewable.The building's estimated useful life is 30 years,and its current fair value is estimated to be $6 million.The incremental borrowing rate is 5%.
Requirement:
Classify this lease and record the journal entries for the first year of the lease.

On January 1,2011,Granite Company Entered a Lease to Rent Office