3- (Valor 10 puntos) On January 1, 2017, Papo's Company signed an 2-year lea agreement for equipment. Annual payments are $38,500, to be made at the beginning each year. At the end of the lease, the equipment will revert to the lessor. The equipme has a useful life of 18 years and has no residual value. At the time of the lease agreeme the equipment has a fair value of $166,000. An interest rate of 14.5% ($18,332) and straight-line depreciation are used. Step 1: Identify the type of lease (Capital or Operating Lease) Conclusion: Step 2: Journal entries January 1, 2017 December 31, 2017 1-Depreciation Expense 2-Interest Expense GENERAL JOURNAL PAGE 1 PR. DEBIT DESCRIPTION