AaBbcode Aabebate AaBbCcDc Abo No Spacing Heading 1 Heading 2 updates, foces, and improvements, choose Check for Updates. Question 1: On December 31, 2021, James Industries leased equipment to Ace Co. Following are the terms of the lease by James Industries, the lessor 1. The lease term is for 4 years ending on December 31, 2025. The leased asset will return to the lessor. 2. The equipment cost $340,000 and has an expected useful life of 5 years. Its normal sales price is $340,000 3. The expected residual value of $20,000 at December 31, 2025, is guaranteed. Both companies use the straight-line depreciation. 4. Equal lease payments are $93,592 and are due on December 31 of each year. The first payment was made on December 31, 2021 (at the beginning of the lease year). 5. Ace's incremental borrowing rate is 12%. Ace knows the interest rate implicit in the lease payments is 10%. Required: 1. Show how the lessor calculated the $93,592 annual lease payments. 2. How should the lessor classify this lease? (2 x 5=10 marks) Question 2: United States) Focus El 3 1