Wynn Manufacturing
On January 1, 2019, Wynn Manufacturing leased a floor of a building for use in its North American operations from Easymoney Bank. The 9-year, noncancellable lease requires annual lease payments of $12,000, beginning January 1, 2019, and at each December 31 thereafter through 2026.
The lease payment includes costs related to property taxes of $3,000. They also include payments for common area maintenance. The observable standalone price for the lease (including the property taxes) is $16,000 and the observable standalone price for the common area maintenance is $2,000.
In addition, Wynn agrees to pay insurance on the floor of the building. Wynn pays the insurance each year when it receives an invoice from Easymoney Bank for the insurance amount. On December 15, 2019, Wynn was billed and paid $1,500 for this insurance. Wynn does not make the election to account for each separate lease component, along with its associated nonlease components, as a single lease component.
The lease agreement does not transfer ownership, nor does it contain a purchase option. The floor of the building has a fair value of $85,000 and an estimated remaining life of 10 years. Easymoney Bank's implicit rate of 11% is known to Wynn. Round percentages to two decimal places.
-Based on the above information, create the Journal Entry for the lessee on the lease commencement date.

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The Answer of Wynn Manufacturing
On January 1, 2019, Wynn Manufacturing leased a floor of a building for use in its North American operations from Easymoney Bank. The 9-year, noncancellable lease requires annual lease payments of $12,000, beginning January 1, 2019, and at each December 31 thereafter through 2026.
The lease payment includes costs related to property taxes of $3,000. They also include payments for common area maintenance. The observable standalone price for the lease (including the property taxes) is $16,000 and the observable standalone price for the common area maintenance is $2,000.
In addition, Wynn agrees to pay insurance on the floor of the building. Wynn pays the insurance each year when it receives an invoice from Easymoney Bank for the insurance amount. On December 15, 2019, Wynn was billed and paid $1,500 for this insurance. Wynn does not make the election to account for each separate lease component, along with its associated nonlease components, as a single lease component.
The lease agreement does not transfer ownership, nor does it contain a purchase option. The floor of the building has a fair value of $85,000 and an estimated remaining life of 10 years. Easymoney Bank's implicit rate of 11% is known to Wynn. Round percentages to two decimal places.
-Based on the above information, create the Journal Entry for the lessee on the lease commencement date.

Wynn Manufacturing on January 1, 2019, Wynn Manufacturing Leased a Floor of Floor