Aylmer Manufacturing Ltd. has signed a lease agreement with Lyons Leasing Inc. to lease some specialized manufacturing equipment. Terms of the lease: The lease is for 5 years commencing January 1, Y3. Aylmer must pay Lyons $62,610 on January 1 of each year, beginning in Y3. Equipment of this type normally has an economic life of 6 years. Lyons has concluded, based on its review of Aylmers financial statements, that there is no unusual credit risk in this situation. Lyons will not incur any further costs with regard to this lease. Lyons purchases this equipment directly from the manufacturer at a cost of $237,476, and normally sells the equipment for $275,644. Aylmers borrowing rate is 7.2%. Lyonss implied interest rate is 6.8%, which is known to Aylmer at the time of negotiating the lease. Aylmer uses the straight-line method to depreciate similar equipment. Both Aylmer and Lyons have calendar fiscal years (year end December 31), and follow ASPE. REQUIRED 1. Is this a capital lease or operating lease? Prove your answer. 2. Determine the PV of the lease 3. Prepare the amortization schedule 4. Prepare the journal entries for Y3 (For the Lessee AND the Lessor)