LSE$-1($Finance Lease$/$No GRV$)$

On December $31,2019,$ Jasmine Corporation signed a $5-$year, non$-$cancelable lease for a machine currently selling for $$42,000.$ The terms of the lease call for Jasmine to make annual payments of $$8,668$ at the beginning of each year, starting December $31,2019.$ The machine has an estimated useful life of $6$ years and a $$5,000$ unguaranteed residual value. The machine reverts back to the lessor at the end of the lease term. Jasmine uses straight$-$line depreciation for all its plant assets. Jasmine$$s incremental borrowing rate is $5\%$ and the lessor$$s implicit rate is unknown. Assume that asset is not specifically designed for use by Jasmine.

$1.$ What type of lease is this for the lessee, Jasmine? Evaluate all five criteria.

$2.$ Compute the present value of the lease payments and set up the lessee$$s amortization table.

$3.$ Write all the necessary journal entries from lease inception to termination.