How would Wildhorse initially measure the lease receivable, and how would Windsor initially measure the lease liability and right-of-use asset?Wildhorse Company leases a building to Windsor, Inc. on January 1, 2017. The following facts pertain to the lease agreement.

1. The lease term is 5 years, with equal annual rental payments of $4,614 at the beginning of each year.

2. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature.

3. The building has a fair value of $22,000, a book value to Wildhorse of $15,000, and a useful life of 6 years.

4. At the end of the lease term, Wildhorse and Windsor expect there to be an unguaranteed residual value of $3,750.

5. Wildhorse wants to earn a return of 9% on the lease, and collectibility of the payments is probable. This rate is known by Windsor. Assume that Windsor was unaware of the implicit rate used in the lease by Wildhorse and has an incremental borrowing rate of 10%.

Q1. How would Wildhorse (lessor) and Windsor (lessee) classify this lease?Sales-type lease or finance lease)?

How would Wildhorse initially measure the lease receivable, and how would Windsor initially measure the lease liability and right-of-use asset? (For calculation purposes, use 5 decimal places as displayed in the factor table provided and round final answers to 0 decimal places, e.g. 5,275.)

Wildhorse: Lease recievable and Present Value of Lease pay. Windsor: Lease Liability/Right-of-Use-of Asset