Lease classification, lease accounting   LO3, 4, 6 Gran Ltd has entered into an agreement to lease a D9 bulldozer to Torino Ltd. The lease agreement details are as follows. Length of lease 5 years Commencement date 1 July 2019 Annual lease payment, payable 30 June each year commencing 30 June 2020 $8000 Fair value of the bulldozer at 1 July 2019 $34 797 Estimated economic life of the bulldozer 8 years Estimated residual value of the bulldozer at the end of its economic life $2000 Residual value at the end of the lease term, of which 50% is guaranteed by Torino Ltd $7200 Interest rate implicit in the lease 9% The lease is cancellable, but a penalty equal to 50% of the total lease payments is payable on cancellation. Torino Ltd does not intend to buy the bulldozer at the end of the lease term. Gran Ltd incurred $1000 to negotiate and execute the lease agreement. Gran Ltd purchased the bulldozer for $34 797 just before the inception of the lease. Required 1. Prepare a schedule of lease payments for Torino Ltd. 2. Prepare journal entries to record the lease transactions for the year ended 30 June 2020 in the records of Torino Ltd. 3. State how Gran Ltd should classify the lease. Give reasons for your answer. 4. Prepare a schedule of lease receipts for Gran Ltd. 5. Prepare journal entries to record the lease transactions for the year ended 30 June 2020 in the records of Gran Ltd.