(35 marks) mechanical equipment to Al Ain Company. The term of the non-cancelable lease is 4 years, and payments are required at the end of each year. Abu Dhabi Leasing signs a lease agreement on January 1, 2014, to lease The following information relates to this agreement: 1. Al Ain Company has the option to purchase the equipment for AED 25,000 upon the termination of the lease. 2. The equipment has a cost and fair value of AED 325,000 to Abu Dhabi Leasing. The useful economic life is 5 years, with a salvage value of AED 25,000. 3. Al Ain Company is required to pay AED 2,000 each year to the lessor for executory costs. 4. Abu Dhabi Leasing desires to earn a return of 12% on its investment. 5. Collectability of the payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor 6. AlI Ain company has the option to purchase the equipment for $25000 upon the termination of the lease. (a) (b) (c) (d) Discuss the nature of the lease to Abu dhabi leasing show reasons of your selection Calculate the recovery amount and compute the annual paym for Abu Dhabi leasing Prepare the amortization for Abu Dhabi leasing until 31 Dec 2017 3 marks) ents (6 marks) (10 marks) Prepare the journal entries on the books of Abu Dhabi Leasing to reflect the payments received under the lease and to recognize income for the years 2014 and 2015. (14 marks) (e) Assuming that Al Ain Company exercises its option to purchase the equipment on December 31, 2017, prepare the journal entry to reflect the sale on Abu Dhabi Leasing's books. (2 marks)