A$.$ Glaus Leasing Company $($lessor$)$ agrees to lease equipment to Jensen Corporation $($lessee$)$ on January $1,2020.$ The following information relates to the lease agreement.

$$ The term of the lease is $7$ years with no renewal option, and the machinery has an estimated economic life of $9$ years.

$$ Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the machinery is not of a specialized nature.

$$ The fair value of the asset on January $1,2020$ is $$700,000.$

$$ At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of $$50,000.$ Jensen estimates that the expected residual value at the end of the lease term will be $$50,000.$ Jensen amortizes all of its leased equipment on a straight$-$line basis. $$ The lease agreement requires equal annual rental payments of $$109,365,$ beginning on January $1,2020.$

$$ Glaus desires a $6\%$ rate of return on its investments, which is known to the lessee.

Required:

Apply all five classification tests $($show your calculations$)$ and discuss the nature of this lease for Jensen Corporation $($lessee$).$