1. Consider the following statement: "All leases must now be capitalized on the balance sheet." Is this statement correct? Explain. 2. On January 1, 2025, Preston Company enters into a nine-year noncancelable lease for equipment having an estimated useful life of 10 years and a fair value to the lessor, Daly Corp., at the inception of the lease of $4,000,000. Preston's incremental borrowing rate is 8%. Preston uses the straight-line method to depreciate its assets. The lease contains the following provisions: 1. Rental payments of $266,000 are payable at the beginning of each six-month period. 2. An option allowing the lessor to extend the lease one year beyond the lease term. 3. A guarantee by Preston Company that Daly Corp. will realize $200,000 from selling the asset at the expiration of the lease. However, the actual residual value is expected to be $120,000. What is the present value of the lease payments for (1) classification of the lease (2) measurement of the lease liability