Culver Corporation entered into a lease agreement on January 1, 2020, to provide Sunland Company with a piece of machinery. The terms of the lease agreement were as follows. 1. The lease is to be for 3 years with rental payments of $13,698 to be made at the beginning of each year. 2. The machinery has a fair value of $64,000, a book value of $40,000, and an economic life of 8 years. 3. At the end of the lease term, both parties expect the machinery to have a residual value of $30,000, none of which is guaranteed. The lease does not transfer ownership at the end of the lease term, does not have a bargain purchase option, and the asset 4. is not of a specialized nature. 5 . The implicit rate is 6%, which is known by Sunland. 6. Collectibility of the payments is probable. Click here to view factor tables. (a) Your answer is correct. Evaluate the criteria for classification of the lease, and describe the nature of the lease. For the lessee, it is a operating lease V and for the lessor, it is a operating lease V eTextbook and Media List of Accounts Attempts: 3 of 4 used Using multiple attempts will impact your score. 50% score reduction after attempt 3 (b) Prepare the amortization schedules Sunland will use over the lease term. SUNLAND COMPANY Lease Amortization Schedule Annuity-Due Basis Interest Reduction of Date Annual Payment on Liability Lease Liability Lease Liability 1/1/20 $ 1/1/20 $ $ 1/1/21 1/1/22 Lease Expense Schedule [C) Amortization of (A) (B) Right-of-Use Asset Straight-Line Interest on (and Liability) Carry Date Expense Lease Liability (A-B) Right- 1/1/20 $ 12/31/20 $ 12/31/21 12/31/22