On $\frac{1}{1}\frac{?}{2012},$ LP$,$ Inc. enters into a $12-$year non$-$cancellable lease for a piece of machinery owned by RJ$,$ Inc. The lease calls for annual payments of $$30,000,$ payable at the end of each year of the lease $($i$.$e$.$ first payment is due on $\frac{12}{31}\frac{?}{12}).$ At the end of the lease, the right to use the machine transfers back to RJ$.$ LP$,$ Inc. declined the opportunity to purchase the machine outright for $$330,000,$ and the economic life of the machine is believed to be $25$ years. There is also an option to renew the lease fo an additional $8$ years at a reduced rate of $$20,000.$ This does represent a bargain renewal option for LP Inc, and they are reasonably certain to use it$.$ LP uses a $6\%$ discount rate to calculate present values, and generally uses straight$-$line amortization for leased assets.

In addition, LP Inc spends $$45,000$ to customize the machinery for use in their factory. They believe that this customization has a useful life of $15$ years.

What type of lease is this, from LP$\text{'}$s perspective?

What $($if any$).$journal entries should LP record on $1/1/2012?$

What $($if any$)$ journal entries should LP record on $12/31/2013?$