Essay
Smart Corporation is a 90%-owned subsidiary of Phan Inc. On January 2, 20X1, Smart agreed to lease $400,000 of construction equipment from Phan for $3,000 a month on an operating lease. The equipment has a 10-year life and is being depreciated using the straight-line method.
Required:
Prepare the eliminations and adjustments required by the intercompany lease on the Figure 5-8 partial worksheet for December 31, 20X3. Key and explain all eliminations and adjustments. 
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