Note: This project uses the chapter appendix. Bermuda Corporation leases the equipment that it uses in operations. Bermuda prefers operating leases (versus capital leases) in order to keep the lease liability off its balance sheet and maintain a low debt ratio. Bermuda is negotiating a ten-year lease on equipment with an expected useful life of 15 years. The lease requires Bermuda to make ten annual lease payments of $20,000 each. due at the end of the period, plus a down payment that is due at the beginning of the lease term. The interest rate in the lease agreement is 10%. The leased asset has a market value of $160,000. The lease agreement specifies no transfer to title to the lessee and includes no bar- gain purchase option. Write a report for Bermuda's management to explain how Bermuda should account for this lease-as an operating lease or as a capital lease. Use the following format for your report: Date: Bermuda Management To: From: Student Names Subject: Accounting for the company's equipment lease