Each of the four independent situations below describes a lease requiring annual lease payments of $45,000. Situation 1 2 3 4 6 5 7 4 9 8 8 8 Lease term (years) Asset's useful life (years) Asset's fair value Bargain purchase option? Annual lease payments $155,000 $280,000 No No Beg. of yr. End of yr. $220,000 $315,000 No $20,000 End of yr. Beg. of yr. 3% (Unknown 6% by Lessee) Lessor's implicit rate 5% 5% (Unknown by Lessee) Lessee's incremental borrowing rate 5% 4% 4% 8% Specialized Asset? No No No No Cost to Lessor PV $175,000 PV PV Required: For each situation, determine the appropriate lease classification by the lessee and the lessor, and indicate why. Calculate the value that both the Lessee and the Lessor place on the lease. Provide the journal entries for the lease inception of each situation