Lease Accounting 1. Colorado Inc. leased a new front-end loader to Cho Construction under a 4-year, non-cancelable contract starting January 1, 2020. Terms of the lease require payments of $30,507 each January 1, starting January 1, 2020. The front-end loader has an estimated life of 9 years, a fair value of $175,000, and a cost to Colorado of $140,000. The estimated fair value of the front-end loader is expected to be $36,000 (unguaranteed) at the end of the lease term. No bargain purchase or renewal options are included in the contract, and it is not a specialized asset. Cho uses straight-line amortization for all similar leased assets, and Colorado depreciates the asset on a straight-line basis with a salvage value of $10,000. Both Colorado and Cho adjust and close books annually on December 31. Collectability of the lease payments is probable. Chos incremental borrowing rate is 9%, and Colorados implicit interest rate of 8% is unknown to Cho. (Please prepare using excel. Format responses and schedules in your workbook using Page Layout. Meaning, it should be easy to read and print. Be mindful of your grammar in your responses. Round all numbers to the nearest dollar.) a) Prepare lease classification tests, measurement schedules, and amortization schedules b) Identify the type of leases involved and give reasons for your classification. Discuss the accounting treatment that should be applied by both the lessee and the lessor. c) Prepare all the entries related to the lease contracts and leased assets for the year 2020 for the lessee and lessors. d) Discuss what should be presented in the balance sheet, the income statement, and the related notes of both the lessee and the lessor at December 31, 2020. e) Suppose Colorado incurred $3,000 of document preparation costs after the execution of lease #3. How would the initial measurement of the lease liability and right-of-use asset be affected?