Classification as a Finance or Operating Lease and Journal Entries, Lessee (1% points) On January 1, 2020, Harrow Inc. leased equipment at an annual payment of $272,317 payable at the beginning of each year for 4 years. The equipment had a fair value of $1,280,000, a book value of $1,200,000, and was commonly purchased or leased by customers. The WMA estimates that the equipment has an estimated useful life of 8 years and an estimated residual value of $400,000, not guaranteed by the lessee. Lessor's implicit rate is 7.5%, which is unknown to the lessee. The lessee's incremental borrowing rate is 8%. The lease does not contain a purchase option or a renewal option. The lessee had no other costs associated with this lease. The present value of the payments is $ 974,104. Required: 2. How would Harrow Inc. classify the lease? b. Prepare the entries for Harrow, Inc. for the years 2020 and 2021, assuming Harrow Inc.'s accounting year ends December 31