Problem: Eubank Company, as lessee, enters into a lease agreement on July 1, 2018, for equipment. The following data are relevant to the lease agreement [Note the date for partial year calculations) 1. The term of the noncancelable lease is 4 years, with no renewal option Payments of $978,446 are due on July 1 of each year. 2. The fair value of the equipment on July 1, 2018 is $3,500,000. The equipment has an economic life of 6 years with no salvage value. 3. Eubank depreciates similar machinery it owns on the straight-line basis. 4. The lessee pays all executory costs separately 5. Eubank's incremental borrowing rate is 10% per year. The lessee is aware that the lessor used an implicit rate of 8% in computing the lease payments (present value factor for 4 periods at 8% is 3.57710, present value factor for 4 periods at 10% is 3.48685). Required: 1. What type of lease has Eubank Company entered into and why is the lease accounted for using this method Show and label any calculations if necessary. Write the answer on the line provided. Type of Lease _Capital lease II. Prepare a partial amortization schedule for years 2018 through 2020 Round all amounts to the nearest dollar. Lease Amortization Schedule Annual Interest on Reduction of Date Lease Payment Unpaid Liability Lease Liability Balance of Lease Liability Droon Copa Nu e Juunal entries on Eubank's books that relate to the lease agreement for the following dates (Round all amounts to the nearest dollar) Show calculations July 1, 2018 Dr. Leased Equipment Cr Leased Liability Cr. Cash December 31, 2018 Dr. Depreciation Expense Cr. Accumulated Depreciation - Capital Lease Dr. Interest Expense FOCUS 0 hp a 190 W July 1, 2019 Dr. Interest expense Dr. Lease Liability Cr. Cash December 31, 2019. Dr. Depreciation Expense Cr. Accumulated Depreciation - Capital Lease Dr. Interest Expense Cr. Interest Pavable na ako