1. Water world Company leased equipment from Costner Company. The lease term is 4 years and requires equal rental payments of $43,019 at the beginning of each year. The equipment has a fair value at the inception of the lease of $150,000, an estimated useful life of 4 years, and no salvage value. Water world pays all executory costs directly to third parties. The appropriate interest rate is 10%. Prepare Water world's January 1, 2011, journal entries at the inception of the lease.