Lessor and Lessee enter into a lease for a computer on January $1,$ year $1.$ The lease duration is $3$ years,

noncancelable, with $2$ renewal options of $1$ year each. The lease provides for a termination penalty assuring

renewal of the lease for $2$ years after the $3-$year regular term ends. The leased equipment consists of a com$-$

puter which has a cost and fair value to lessor at lease inception of $$100,000.$ The estimated economic life

of the asset is $6$ years. The asset has no residual value. The lease rental is $$27,\frac{991}{?}$ year, which includes

executory costs, payable at the beginning of each year. Lessor pays executory costs of $$4,\frac{800}{?}$ year, at

beginning of each year. The lessee's incremental rate is $10\%.$ The lessor's implicit rate is $8\%$ and is known

to the lessee.

Required: Record in lessee's books all entries related to the lease during the first year. Show supporting

computations.