E21-7 (L02,4) (Type of Lease; Amortization Schedule) Macinski Leasing Company leases a new machine to Sharrer Cor oration. The machinc has a cost of S70,000 and fair value of S95,000 Under the 3-ycar, non-cancclable contract, Sharrer will receive title to the machine at the end of the lease. The machine has a 3-year useful life and no residual value. The lease was signed on January 1, 2017. Macinski expects to carn an 8return on its investment, and this implicit rate is known by Sharrer The annual rentals are payable on each December 31, beginning December 31, 2017 Instructions (a) Discuss the nature of the lease arrangement and the accounting methud that cach party to the lease should apply b) Prepare an amortization schedule that would be suitable forboth the lessor and the lessee and tha l the yars involved. (c) Prepare the journal entry at commencement of the lease for Macinski (d) Prepare the journal entry at commencement of the lease far Sharrer (e) Prepare the journal entry at commencement of the lease for Sharrer, assuming (1) Sharrer docs not know Macinski's implicit rate (Sharrer's incremental borrowing rale isad(2) Sharrer incurs initial directs costs of S10,000