On January 1, 2020, CMB Company leased equipment to First Tech Co. for a two-year period ending December 31, 2021. At the end of the lease term, the leased asset will be reverted back to CMB Company. The cost of the equipment is $27,000, and the fair value of the asset on 1/1/2020 is $43,141. The equipment has an expected useful life of three years on 1/1/2020. The lessee-guaranteed residual value at the end of the non-cancelable lease term is $6,000 with an expected residual value of $3,000. The annual lease payment is $20,000 and is due on January 1 of each year, with the first payment on 1/1/2020. The collectibility of the remaining lease payments is reasonably assured and the equipment does not possess a specialized nature. Both CMB Company and First Tech Co. use a 10% discount rate and straight-line depreciation. Required: a. Show how CMB Company calculated the $20,000 annual lease payment b. How should this lease be classified by First Tech Co. (the lessee) and by CMB Company (the lessor)? c. Prepare the appropriate entries for First Tech Co. on 1/1/2020, 12/31/2020, 1/1/2021 and 12/31/2021 (assuming that the equipment was reverted back to CMB and the fair value of the equipment on 12/31/2021 is $2,500 (Note: these entries should be prepared based on finance lease for First Tech regardless of your answer in b)