. On January 1, 2020. Tesla Corp. (lessor) entered a 10 year noncancellable lease agreement with Stella Corp. (lessee) for equipment which was carried in Tesla's accounting records at $2.265.000 and had a fhir value of $2,400,000 The annual lease payments are $355.000 are due each January 1 . The first payment was made on January 1, 2020 when the lease agreement was finalized. The Lessee corporation pays all executory costs directly to 3rd party except for maintenance fees of $1,000 per year. The implicit interest rate of 10% which was stipulated in the lease agreement and known to lessee. The Lessee incremental borrowing rate is 9%. Stella expects the machine to have a ten-year life with residual value which is guaranteed equal to $1500. It can be depreciated on a straight-line basis. Collectability of the rentals is reasonably assured, and there are no important uncertainties surrounding the costs yet to be incurred by Tesla. . e Both entities follow IFRS. Instructions a. Classify the lease contract in the lessor books. Explain your answer (3 Marks) b. Record the journal entries on Jan.1,2020 for inception of lease contract and receiving the first payment in the lessor books (9 marks)