Lahiri Leasing purchased a single engine plane for $420,000 and leased it to Red Barcon Flying Club for its fair value of $685,464 on January 1,2024 Note: Use tables, Excel, or a financial calculater. (EV of\$1, PV of S1, EVA ofS1. PVA ol S1. EVAD of S1 and PVAD ofS13 Terms of the lease agreement and related facts were a. Elght annual payments of $120,000 beginning January 1, 2024, the beginning of the lease, and on each December 31 through 2030. Red Baron knows that Lahiri Leasing's implicit interest rate was 11%. The estimated useful ufe of the plane is eight years. Payments were caiculated as follows: Amount to be necovered (fair value) Lease payments at the beginning of each of the next eight years: (4685,464 + 5.7122) 3655,464 S 120,000 "Present value of an annulty due of $1:n=8,l=11% b. Red Baron's incremental borrowing rate is 12%. c. Incremental costs of consummating the completed lease transaction incurred by Lahiri Leasing were $18,746. Required: 1. How should this lease be classified (a) by Lahir Leasing (the lessor) and (b) by Red Baron (the lesseel? 2. Prepare the appropriate entries for both Red Baron Flying Club and Lahiri Leasing on January 1, 2024. 3. Prepare an amortization schedule that describes the pattern of interest expense over the lease term for Red Baron Flying Club. 4. Prepare the appropriate entries for both Red Baron and Lahiri Leasing on December 31,2024 (the second lease payment), Both companies use straight-line depreclation or amortization. 5. Prepare the appropilate entries for both Red Baron and Lahiri Leasing on December 31, 2030 (the final lease payment)