On January 1, 2020, Sindri and Brokk, Inc. lease a blacksmith warehouse from Hephaestus, Corp. The lease terms are as below. Lease Term (yrs) Minimum Lease Payment Fair Value Asset Cost (on Stitch's Books) Asset Life (xrs) 51 $75,000 $25,000,000 $13,000,000 1,500 Guaranteed Residual Value Expected Residual Value Ownership at End of Lease Purchase Option @ End of Lease If applicable, Hephaestus depreciates all assets on a straight-line basis. Sindri and Brokkr, Inc uses 12% as its required rate of return when calculating lease returns and is unaware of Hephaestus, Corp marginal borrowing rate. All amounts are paid on January 1 of each year. Both Sindri and Brokkr, Inc. and Hephaestus, Corp have December 31 year-ends. REQUIRED: Answers the following for Sindri and Brokkr. Inc.: (a) [2 pts] What is the classification of this lease and why? (b) [4 pts] What is the journal entry for January 1, 2020? (c) [3 pts] What is the journal entry for December 31, 2020? (d) [2 pts] What is the journal entry for January 1, 2021? (e) [2 pts] What is the journal entry for December 31, 2021? $0 $300,000 Hephaestus, Corp. $24,000,000 Problem 2. Using the information from Problem 3.1, answer the below questions for Hephaestus, Corp. Hephaestus's marginal borrowing rate, of which Sindri and Brokkr, Inc are unaware, is 10%. REQUIRED: Answers the following for Hephaestus, Corp.: (a) [2 pts] What is the classification of this lease and why? (b) [2 pts] What is the journal entry for January 1, 2020? (c) [3 pts] What is the journal entry for December 31, 2020? (d) [2 pts] What is the journal entry for January 1, 2021? (e) [2 pts] What is the journal entry for December 31, 2021?