Gran Ltd has entered into an agreement to lease a D9 bulldozer to Torino Ltd. The lease agreement details are as follows.

Gran Ltd has entered into an agreement to lease a D9 bulldozer to Torino Ltd. The lease agreement details are as follows. Length of lease 5 years Commencement date 1 July 2019 Annual lease payment, payable 30 June each year commencing 30 June 2020 $8,000 Fair value of the bulldozer at 1 July 2019 $34 797 Estimated economic life of the bulldozer 8 years Estimated residual value of the bulldozer at the end of its economic life $2 000 Residual value at the end of the lease term, of which 50% is guaranteed by Torino Ltd $7 200 Interest rate implicit in the lease 5% The lease is cancellable, but a penalty equal to 50% of the total lease payment is payable on cancellation. Torino Ltd does not intend to buy the bulldozer at the end of the lease term. Gran Ltd. Incurred $ 1,000 to negotiate and execute the lease agreement. Gran Ltd. purchased the bulldozer for $34,797 just before the inception of the lease. Required 1. Prepare a schedule of lease payment for Torino Ltd. 2. Prepare journal entries to record the lease transactions for the year ended 30 June 2020 in the record of Torino Ltd. 3. State how Gran Ltd should classify the lease. Give reasons for your