At the end of the December 31 2016 fiscal year, Yin truckingcorporation which follows IFRS 16, negotiated and closed a longterm lease contract for newly constructed truck terminals andfreight storage facilities. The buildings were erected to thecompany’s specifications on land owned by the company. On January 12017, Yin trucking corporation took possession of the leasedproperties and made a cash payment of 1,048,00$. Although theuseful life of each terminal is 40 years, the non cancellable leaseruns for 20 years from January 1 2017 with a purchase optionavailable upon expiration of the lease. The 20 year lease iseffective for the period January 1 2017 through December 31 2036.Advance rental payments of 900,000$ are payable to the lessor onJanuary 1 of each first 10 years of the lease term. Advance rentalpayments of 320,000$ are due on January 1 of each first 10 years ofthe lease term.The company has an option of purchasing all of theseleased facilities for 1 million on December 31 2036 although theirfair value at that time is to be estimated at 3 million$. At theend of the 40 years, the terminals and the facilities will have noremaining value. Yin trucking must also make annual payments onJanuary 1 of each year to the lessor of 125,000$ for property taxesand 23,00$ for insurance. The lease was negotiated at 6% rate ofreturn.

Required:

1) assuming a capitalized value of terminal facilities atJanuary 1 2017 of 8.7 million, prepare the journal entries for YINTRUCKING CORPORATION.

a) The signing of the lease

b) the cash payment to the lessor on January 1 2017

c) Depreciation of the cost of the properties for 2017 using thestraight line method

d) The accrual of interest expense at December 31 2017 and anyother adjusting journal entries