1. On January 1, 2017, Flying High Airlines leased a new airplane for a term of 10 years The expected life of the airplane is 20 years. There are no rights to purchase the asset at the end of the term, no bargain purchase option, and no residual value guarantee. The lease stipulates that Flying High makes annual payments of S650,000 beginning at the end of the first year (December 31, 2017). Flying High has an incremental borrowing rate of 4.5% and the fair market value ofthe airplane on January 1, 2017 is $6,250,000 (for simplicity, assume the lessors implicit rate is greater than 45%) a. What journal entries related to thelease arrangement should be recorded during 2017 (assume Flying High's fiscal year end is December 31) Identify any effects the lease arrangement and the associated reporting would have on the balance sheet, income statement, and statement of cash flows for 2017 b. C. What is the annual lease payment that results in a present value ofminimum lease payments equal to 90% of the fair market value of the airplane ($6,250,000)? 2. Now assume that the lessor decided to require the lease payments at the beginning of the bargain purchase option under which the lessee could purchase the airplane at the end of a. What jounal entries related to thelease arrangement should be recorded during year as opposed to the end of the year. Also assume that the lease arrangement had a the contract for $250,000 2017 Identify any effects the lease arrangement and the associated reporting would have on the balance sheet, income statement, and statement of cash flows for 2017 b