7 10 points Save Arower On January 1, 2020, Adliya Company signs a 4-year lease contract to lease an equipment from Gulf Company. The lease agreement is non-renewable and non-cancelable According to the agreement, the lessee is required to make annual rental payment of $240,000 beginning from January 1, 2020. The lease contains the following provisions: 1. The estimated economic life of the equipment is 5 years 2. At the inception of the lease, the fair value of the equipment is $840,000. 3. Each annual rental payment includes $14,487.72 of executory costs relating to property taxes. 4. The lessee's incremental borrowing rate is 10%. The lessor's implicit rate is 8% and is known to the lessee 5. At the end of the lease term, the equipment will revert to the lessor, and at that time the equipment is expected to have unguaranteed residual value of $48,000 6. Both, Adliya Company and Gulf Company, use the straight-line method for depreciation Additional information: The present value of an Ordinary Annuity of $1 and the present value of an Annuity Due of $1 for 5 periods at 8%, 9% and 10% are as follows: The present value of an Annuity Due of $1 Period 1 8% 1.00000 9% 10% 1.00000 1.00000 2 1.92593 1.91743 1.90909 3 2.78326 275911 2.73554 4 3.57710 3.53129 3.48685 5 4.31221 4.23972 4.16987 Instructions: A What is the type of this lease to Adliya Company? Explain why B. Prepare an amortization schedule through the years 2021 and 2022 that would be suitable for the lessee