On Januay $1,2024,$ Rick's Pawn Shop leased a truck from Corey Motors for a sixyew period with an eption to extend the lease for three year.

Rick's had no significant economic incentive as of the beginning of the lease to everclse the three year extersion option. Annual lease payments are $$28\mathrm{.}000$ due on December in of each year, calculated by the lessor using a $74$ discount rate.

The expected useful life of the asset in nine year, and to fair value in $$710,000$

Assume that at the beginning of the third yeac, January $1,2025,$ Bick's had made signiflcart improvements to the truck whose cost could be recovered only if it exercises the eatersion option, ovealing an expectation that extervion of the lease was "reasonatily certain"

The relevart interest rate at that time was $8\%.$ Newulted:

Prepare the journal entery, Ta ang, on Jahuey $1$ and on December $31$ of the thind year $2006$ for the lesset to accourt for the neassessment.

Prepare the journal every, If ang, en January $1$ and on December $3$: of the flird yeac, $2026$ for the lensor to account for the ressumsument.

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$1$

Prepare the journal entry, if ang, on lanuary $1$ and on December $31$ of the third yeac, $2026$ for the lessee to account for the reassessment.

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field. Round your intermediate and final answers to nearest whole dollar:

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Viene transaction line view leurnel entry eveksheet

$\backslash$table$[[,$No$,$Datio,Genersel Journal,Debit,Credin$],[,1,$January $01,2008,$Righ$-$olsuse asset,,$],[,,,$Lease papable,,$],[,2,$Decemer $31\mathrm{.}2098,-9-9-$ supense,,$],[,,$Lease payabie,,$],[,,$Cash,,$],[3,$December $31,2008,$Anohraton exyerse,,$],[,,$nogidne with,,$]]$

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