Pina Incorporated leases a piece of equipment to Kingbird Corporation on January 1, 2020. The lease agreement called for annual rental payments of $4,970 at the beginning of each year of the 4-year lease. The equipment has an economic useful life of 6 years, a fair value of $25,900, a book value of $20,900, and both parties expect a residual value of $8,350 at the end of the lease term, though this amount is not guaranteed. Pina set the lease payments with the intent of earning a 4% return, and Kingbird is aware of this rate. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term, and the asset is not of a specialized nature.

- Determine the nature of the lease to both Pina and Kingbird. the lease is a/an ________ lease to pina

the lease is a/an __________ lease to kingbird

- Prepare the lease amortization schedule(s) for Kingbird for all 4 years of the lease. (Round answers to 0 decimal places, e.g. 5,275.)

- Prepare the journal entries for Kingbird for 2020 and 2021.

- Suppose Kingbird incurs initial direct costs of $700 related to the lease. Prepare the journal entries for 2020.