On January 1, 2021, Copper Leasing Company leased equipment to Crystal Corporation for a 5-year period ending December 31, 2025, at which time possession of the leased equipment will revert back to Copper Leasing Company. The lease is noncancelable. The lease terms do not provide for transfer of legal title, do not contain a bargain purchase option, and do not require the lessee to guarantee a residual value. Initial direct costs of negotiating and consummating the completed lease transaction incurred by Copper Leasing Company on January 1, 2021 were $10,000. The equipment, which has expected useful life of 5 years and expected residual value of $20,000, cost Copper Leasing Company $250,000 to manufacture. Its normal sales price was $320,000 on January 1, 2021. Equal payments under the lease are $68,320 and are due on January 1 of each year. The first payment was made on January 1, 2021. Collectibility of the remaining lease payments is reasonably assured, and Copper Leasing Company has no material cost uncertainties. Crystals incremental borrowing rate is 7%. Crystal knows that the interest rate implicit in the leasing payments is 6%. Both companies use straight-line depreciation. 1. What is the nature of this lease to Copper Leasing Company (the lessor)? Explain. 2. Prepare the appropriate entries for Copper Leasing Company (the lessor) to record the lease and the lease payment at its inception. Show calculations. 3. Determine the total amount of lease-related income Copper Leasing Company (the lessor) will report for the year 2021.