Pina Corporation entered into a lease agreement on January 1, 2020, to provide Blossom Company with a piece of machinery. The terms of the lease agreement were as follows. 1. 2. 3 The lease is to be for 3 years with rental payments of $14,941 to be made at the beginning of each year. The machinery has a fair value of $60,000, a book value of $40,000, and an economic life of 8 years. At the end of the lease term, both parties expect the machinery to have a residual value of $30,000, none of which is guaranteed. The lease does not transfer ownership at the end of the lease term, does not have a bargain purchase option, and the asset is not of a specialized nature The implicit rate is 4%, which is known by Blossom Collectibility of the payments is probable. 4 5. 6. Your answer is correct Evaluate the criteria for classification of the lease, and describe the nature of the lease. For the lessee, it is a operating tease and for the lessor, it is a operating lease V Prepare the amortization schedules Blossom will use over the lease term BLOSSOM COMPANY Lease Amortization Schedule Annuity-Due Basis Interest Reduction of on Liability Lease Liability Date Annual Payment Lease Liabili 1/1/20 1/1/20 $ $ 1/1/21 1/1/22 Lease Expense Schedule (A) Straight-Line Expense (B) Interest on Lease Liability (C) Amortization of Right-of-Use Asset (and Liability) (A-B) Car Righ Date 1/1/20 12/31/20 $ 1 12/31/21 12/31/22