Terms of a lease agreement and related facts were:
a. Costs of legal fees and commissions incurred by the lessor for the lease transaction were $16,968.
b. The retail cash selling price of the leased asset was $2,000,000. Its useful life was three years with no residual value.
c. The lease term is three years and the lessor paid $2,000,000 to acquire the asset.
d. Annual lease payments at the beginning of each year were $737,320.
e. Lessor's implicit rate when calculating annual rental payments was 11%.
Required:
Round your answers to the nearest whole dollar amounts.
1. Prepare the appropriate journal entries for the lessor to record the lease and related payments at its beginning, January 1, 2018.
2. Calculate the effective rate of interest revenue after adjusting the net investment by initial direct costs.
3. Record any journal entry(s) necessary at December 31, 2018, the fiscal year-end.

Question

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The Answer of Terms of a lease agreement and related facts were:
a. Costs of legal fees and commissions incurred by the lessor for the lease transaction were $16,968.
b. The retail cash selling price of the leased asset was $2,000,000. Its useful life was three years with no residual value.
c. The lease term is three years and the lessor paid $2,000,000 to acquire the asset.
d. Annual lease payments at the beginning of each year were $737,320.
e. Lessor's implicit rate when calculating annual rental payments was 11%.
Required:
Round your answers to the nearest whole dollar amounts.
1. Prepare the appropriate journal entries for the lessor to record the lease and related payments at its beginning, January 1, 2018.
2. Calculate the effective rate of interest revenue after adjusting the net investment by initial direct costs.
3. Record any journal entry(s) necessary at December 31, 2018, the fiscal year-end.

Terms of a Lease Agreement and Related Facts Were