Nace Manufacturing Company leased a piece of nonspecialized equipment for use in its operations from Righteous Leasing on January 1, 2019. The 10 year lease requires lease payments of $5,000, beginning on January 1, 2019, and at each December 31 thereafter through 2027 The equipment is estimated to have a 10 year life, is depreciated on the straight-line basis and will have no residual value at the end of the lease term. Nace's incremental borrowing rate is 12% Initial direct costs of $1,400 are incurred by the lessee on January 1, 2019. Righteous Leasing acquired the asset just prior to the lease term at a cost of $32,695. Collection of all lease payments is reasonably assured What is the reduction in the lease liability recorded with the first and second lease payments, respectively? O A. $3,304, $3,304 OB. $27,844 51,659 O C. $5,000 $1,803 OD. $3.797: $3.341 Northern Equipment leases cooling towers to Warmup Corporation. The equipment is not specialized and is delivered on January 1, 2019. The fair value of the equipment is $180,000. The cost of the equipment to Northern is $170,000 and the expected life of the testing equipment is 8 years. At the end of the useful life, it is expected that the equipment will have a residual value of $20,000, although the lessee guarantees only $15,000. Northern Incurs initial direct costs of $20,000, which they expense. The lease term for the equipment is 8 years, with the first payment of $27,000 due upon delivery, and seven subsequent annual payments of $27.000 beginning on December 31, 2019 and ending on December 31, 2025 The lease is properly classified as a sales-type lease What is Northern's implicit rate for the lease? (Round any intermediate calculations to the nearest dollar and round your final percentage two decimal places, X.XX%.) O A. 9.56% OB. 5.61% OC. 7.71% OD. 7.22%