P21.12 (L02, 3, 4) (Lessee-Lessor Entries, Statement of Financial Position Presentation, Finance 6 and Sales-Type Lease) Winston Industries and Ewing SA enter into an agreement that requires Ewing to build three diesel-electric engines to Winston's specifications. Upon completion of the engines, Winston has agreed to lease them for a period of 10 years and to assume all costs and risks of ownership. The lease is non-cancelable, becomes effective on January 1, 2019, and requires annual rental payments of 384,532 each January 1, starting January 1, 2019. Winston's incremental borrowing rate is 8%. The implicit interest rate used by Ewing and known to Winston is 6%. The total cost of building the three engines is 2,600,000. The econo e life of the engines is estimated to be 10 years, with residual value set at zero. Winston depreciates similar equipment on a straight-line basis. At the end of the lease, Winston assumes title to the engines Collectibility of the lease payments is probable. 3 2 structions a. Discuss the nature of this lease transaction from the viewpoint of the lessor. b. Prepare the journal entry or entries to record the transaction on January 1, 2019, on the books of c. Prepare the journal entry or entries to record the transaction on January 1,2019, on the books of d. Prepare the journal entries for both the lessee and lessor to record the first rental payment on e. Prepare the journal entries for both the lessee and lessor to record any entries needed in Winston (the lessee). Ewing (the lessor). January 1, 2019. connection with the lease at December 31, 2019. (Prepare a lease amortization schedule for 2 years.) notes) at December 31, 2019, for both the lessee and the lessor addition, assume Winston receives a lease incentive from Ewing of 50,000 to enter the lease f. Show the items and amounts that would be reported on the statement of financial position (not g. Assume that Winston incurs legal fees related to the execution of the lease of 30,000. In How will this affect your answer to part P21.12b