Calder Company, the lessor, enters into a lease with Darwin Company, the lessee, to provide heavy equipment beginning January 1, 2017. The lease is appropriately classified as a sales-type lease. The lease terms, provisions, and related events are as follows:
• The lease is noncancelable, has a term of 8 years, and has no renewal or bargain purchase option.
• The annual rentals are $65,000, payable at the end of each year.
• The interest rate implicit in the lease is 15%.
• Darwin agrees to pay all executory costs directly to a third party.
• The cost of the equipment is $280,000. The fair value of the equipment to Calder is $308,021.03.

• Calder incurs no material initial direct costs.
• Calder expects that it will be able to collect all lease payments.
• Calder estimates that the fair value at the end of the lease term will be $50,000 and that the economic life of the equipment is 9 years. This residual value is guaranteed by Darwin.
The following present value factors are relevant:
• PV of an ordinary annuity _{n58, i515%} = 4.487322
• PV _{n58, i515%} = 0.326902
• PV _{n51, i515%} = 0.869565

Required:
1. Determine the proper classification of the lease.
2. Prepare a table summarizing the lease receipts and interest income earned by Calder for this lease.
3. Prepare journal entries for Calder for the years 2019, 2020, and 2021.
4. Next Level Prepare partial balance sheets for December 31, 2019, and December 31, 2020, showing how the accounts should be reported. Use the present value of next year’s payment approach to classify the lease receivable as current and noncurrent.
5. Next Level Prepare partial balance sheets for December 31, 2019, and December 31, 2020, showing how the accounts should be reported. Use the change in present value approach to classify the lease receivable as current and noncurrent.