Problem 7 York Lessee Co. enters a non-cancelable lease agreement with Fox Co. on January 1, 2021, under which Fox Co. leases a machine to York Lessee Co. Information pertaining to the lease is provided below: - Fair value of the machine at the lease commencement date: $30,000 - Cost of the machine to the lessor: $19,000. - Lessor's implicit rate: 10%. This rate is known by the lessee. - Lease term is 14 years. - Lease payments are $3,702.17 per year, due at the beginning of each year (starting January 1, 2021). - Useful life of the leased asset: 14 years, with no residual value, depreciated using the straight line method. - Lease contains no bargain purchase option, no transfer of ownership; the asset is not of a specialized nature. - Collection of all lease payments is reasonably assured. Part A. What is the correct classification of this lease from the perspective of the lessee? Part B. Prepare the lessee's journal entry(ies) on the lease commencement date, 1/1/2021. Part C. Prepare the lessee's amortization schedule for the lease liability. Part D. Prepare the lessee's journal entries on December 31, 2021 and January 1, 2022. Part E. What is the correct classification of this lease from the perspective of the lessor? Prepare the lessor's journal entry(ies) on 1/1/2021,12/31/2021 and 1/1/2022. Problem 7 York Lessee Co. enters a non-cancelable lease agreement with Fox Co. on January 1, 2021, under which Fox Co. leases a machine to York Lessee Co. Information pertaining to the lease is provided below: - Fair value of the machine at the lease commencement date: $30,000 - Cost of the machine to the lessor: $19,000. - Lessor's implicit rate: 10%. This rate is known by the lessee. - Lease term is 14 years. - Lease payments are $3,702.17 per year, due at the beginning of each year (starting January 1, 2021). - Useful life of the leased asset: 14 years, with no residual value, depreciated using the straight line method. - Lease contains no bargain purchase option, no transfer of ownership; the asset is not of a specialized nature. - Collection of all lease payments is reasonably assured. Part A. What is the correct classification of this lease from the perspective of the lessee? Part B. Prepare the lessee's journal entry(ies) on the lease commencement date, 1/1/2021. Part C. Prepare the lessee's amortization schedule for the lease liability. Part D. Prepare the lessee's journal entries on December 31, 2021 and January 1, 2022. Part E. What is the correct classification of this lease from the perspective of the lessor? Prepare the lessor's journal entry(ies) on 1/1/2021,12/31/2021 and 1/1/2022