The following relate to an operating lease agreement:
a. The lease term is 3 years, beginning January 1, 2011.
b. The leased asset cost the lessor $800,000 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 $137,000.
d. Costs of negotiating and consummating the completed lease transaction incurred by the lessor were $2,400.
Required:
Prepare the appropriate entries for the lessor from the inception of the lease through the end of the lease term.