krause Company on January 1, 2018, enters into a nine-year noncancelable lease for equiy estimated useful life of 10 years and a fair value to the lessor, Daly Corp, at the i $4000, its assets. The lease contains the following provisions: nception of the lease of reetborrowing rate is 8%. Krause uses the straight-line method to deprecialtse 1. Rental payments of $266,000 for property tases, payable at the beginning of each sis-month peried. 2. An option allowing the lessor to extend the lease one year beyond the lease term. 3. A guarantee by Krause Company that Daly Corp will realize $200,000 from selling the asset at the expiration of the lease. However, the actual residual value is expected to be $120,000. Instructions (a) What kind of lease is this to Krause Company? Briefly explain. (b) What should be considered the lease term? Briefly explain. measurement of the lease liability? (PV factor for annuity due of 20 semi-annual payments at 8% annual rate, 14.13394; PV factor for amount due in 20 semi-annual interest periods at 8% annual rate, 45639.) (Round to nearest dollar.) c) What is the present value of the lease payments (1) for classification of the lease and (2) for krause Company on January 1, 2018, enters into a nine-year noncancelable lease for equiy estimated useful life of 10 years and a fair value to the lessor, Daly Corp, at the i $4000, its assets. The lease contains the following provisions: nception of the lease of reetborrowing rate is 8%. Krause uses the straight-line method to deprecialtse 1. Rental payments of $266,000 for property tases, payable at the beginning of each sis-month peried. 2. An option allowing the lessor to extend the lease one year beyond the lease term. 3. A guarantee by Krause Company that Daly Corp will realize $200,000 from selling the asset at the expiration of the lease. However, the actual residual value is expected to be $120,000. Instructions (a) What kind of lease is this to Krause Company? Briefly explain. (b) What should be considered the lease term? Briefly explain. measurement of the lease liability? (PV factor for annuity due of 20 semi-annual payments at 8% annual rate, 14.13394; PV factor for amount due in 20 semi-annual interest periods at 8% annual rate, 45639.) (Round to nearest dollar.) c) What is the present value of the lease payments (1) for classification of the lease and (2) for