The Following Relate to an Operating Lease Agreement

Essay

The following relate to an operating lease agreement:
a. The lease term is 3 years, beginning January 1, 2018.
b. The leased asset cost the lessor $4,000,000 and had a useful life of eight years with no residual value. The lessor uses straight-line depreciation for its depreciable assets.
c. Annual lease payments at the beginning of each year were $685,000.
d. Direct costs incurred by the lessor to consummate the completed lease transaction were $12,000.
Required:
Prepare the appropriate journal entries for the lessor from the beginning of the lease through the end of the lease term. Round your answers to the nearest whole dollar amounts.