On December 31, 2014 Company X entered a lease agreement for the rental of machinery under the following terms: 1- The lease is for 5 years and is non-cancelable 2- Payments are due at the beginning of the period and are paid annually 3- There is an option to extend the lease for 2 more years and it is reasonalbe certain that X will re-new the lease after 5 years 4- The lease payments are $7,000 per year 5- The estimated useful life of the machinery is 9 years 6- There are no bargain purchase options at the end of the lease term 7- The implicit rate on the lease is 4 percent and te incremental borrowing rate to X is 5 percent 8- The fair market value of the equipment on the inception date is $50,000. Using the present lease rules-ASU 840, please answer the following : Keep in mind that X will prefer to treat thism lease as an off balance sheet transaction. 1- What type of lease is this to X? Why? 2- Record the journal entry on December 31, 2014 3- Prepare a Balance Sheet to reflect this lease transaction as of January 1, 2017 4- Prepare the income statement effects of this lease for the 2016 calendar year 5- Prepare the cash flow effects of this lease for the 2018 calendar year