Problem (20 points) The following facts pertain to a noncancelable lease agreement between SONNY Leasing Company and CHER Company, a calendar year lessee. Inception date: January 1, 2021 Annual lease-payment due at the beginning of each year, beginning with January 1, $32,000 2021 (INCLUDES Executory costs of $2,000 per year) Lease term 2 years Economic life of leased equipment 3 years Bargain Purchase Option at the end of the lease term $1,000 Fair value of asset at January 1, 2021 $58,365 Lessor's implicit rate (known to lessee) 9% Lessee's incremental borrowing rate 10% CHER uses the straight-line method of depreciation and assumes a zero salvage value on applicable PP&E Instructions: Explain what type of lease this is to the lessee. Be clear!! Identify all of the tests passed. 2. Compute the present value of the minimum lease payments. (Round all calculations to nearest dollar) 3. Record all of the entries required by the lessee on 1-1-2021. Complete the lessee's amortization schedule below: The company's year-end is December 31. (Round all calculations to nearest dollar!) EXCLUDE EXECUTORY COSTS FROM THIS SCHEDULE. You may have a $1.00 rounding difference. Date MLP Interest Reduction in Lease Liability Lease Liability 1-1-21 1-1-21 1-1-22 12-31-22 5. Record all the proper adjusting entries for lessee at the end of the first year (12-31-21). 6. Show what the relevant sections of the 12-31-21 Balance Sheet would look like with respect to this lease. 7. Show the relevant 2021 income statement accounts and amounts reported under this lease