1. On 1 July 2008, Copper Coin Ltd leased a photocopier from Silver Note Corp., a company that manufactures, retails and lease copiers. The photocopier has cost Silver Note Corp. $30,000 to make but had a fair value on 1 July 2008 of $35,080. The lease agreement contained the following provisions:

Prepare for the lessee; the lease payment schedule.

Lease term	3 years
Annual payment, payable in advance on 1 July each year	$ 14,500
Economic life of the copier	4 years
Estimated residual value at the end of the lease term when the copier is returned to Silver Note Corp.	$3,000
Residual value guaranteed by Copper Coin	$ 1,500
Interest rate implicit in the lease	10%
The lease is cancellable, provided another lease is immediately entered into.

The annual payment included an amount of $2,500 p.a. to reimburse Silver Note Corp. for the cost of paper and toner supplied to Copper Coin Ltd. Silver Note Corp.s solicitor prepared the lease agreement for a fee of $1,365.

On 30 June2011, at the end of the lease term, Copper Coin Ltd retuned the copier to Silver Note Corp., which sold the copier for $3,000.

Required:

1,Classify the lease for the both the lessor and the lessee, justify your answer.

2.Prepare for the lessee; the lease payment schedule.