5. Accounting for Lease Agreements - both parties (23 points) On January 1, 2019, Nuggets, Inc. engaged in a lease agreement with Clippers Manufacturing for the use of equipment with an estimated economic life of five years. The term of the lease is four years and requires four annual payments of $100,000 beginning January 1, 2019 and continuing on December 31 of every year from 2019 to 2021. The equipment is not specialized. Clippers Manufacturing incurred $5,000 in costs related to obtaining credit reports on Nuggets and closing the lease arrangement. Nuggets incurred no initial direct costs. The equipment cost Clippers $350,000 to manufacture and the fair value of the equipment is $379,761. The lease terms follow: Nuggets guarantees that the equipment returned to Clippers on December 31, 2022 will be worth $30,000. There is no transfer of the asset at the end of the lease term and no purchase option. The rate implicit in the lease is 8% and is known to Nuggets. Required: a. What type of lease has each party signed? Explain in terms of the new US GAAP standard (ASC 842). (2 pts) b. Prepare all of the 2019 journal entries for both the lessor and lessee. (10 pts) c. Prepare all of the 2022 journal entries for both the lessor and lessee, assuming that the fair value of the equipment at the end of the lease (12/31/22) is $30,000. How would your answer differ if the equipment's fair value is $25,000 at the end of the lease? (3 pts) d. Now assume that the $30,000 residual value is estimated by Clippers and is not guaranteed. Answer parts a., b., and c. above under this for Clippers (Lessor) only. (8 pts)