a. On January 1, 2014, Ursula Limited agreed to a non-cancellable lease for a submarine, which the following information is available: The asset is new at the inception of the lease term with a 16 year expected life and is worth $219,000. b. Initial lease term is five years at $40,000 per year (includes $8,000 for insurance and maintenance), starting and paid on 1 January 2014. C. d. At the end of the initial lease term, the lease is renewable at Ursula's option for $20,000 per year (includes $5,000 for insurance and maintenance) for a further 8 years. Any residual value is not guaranteed by Ursula Limited and the asset reverts back to the lessor at the end of any lease term. The straight-line depreciation method is used for the leased asset. Ursula Limited's incremental borrowing rate is 8%. The rate implicit in the lease is unknown. e. f. g. Ursula can rent a submarine that is 8 years old today for approximately $ 35,000 per year. h. Ursula Limited has a 31 December fiscal year-end. Required: 1. Is this an operating lease or a financing lease? Explain. 2. Prepare an amortization schedule for the first two years. 3. Prepare all necessary entries for 2014