Question 1 On January 1, 2017, Pharoah Company leased equipment to Packer Corporation. The following information pertains to this lease. , The term of the noncancelable lease is 5 years. At the end of the lease term, Packer has the option to purchase the equipment for $9,000, while the expected residual value at 1. the end of the lease is $14,000. 2. Equal rental payments are due on January 1 of each year, beginning in 2017 3. The fair value of the equipment on January 1, 2017, is $210,000, and its cost is $158,000. The equipment has an economic life of 6 years. Packer depreciates all of its equipment on a straight-line basis. s. 4. Pharoah set the annual rental to ensure a 6% rate of return, packer's incremental borrowing rate is 7% and the implicit rate of the lessor i un non Collectibility of lease payments by the lessor is probable. 6. Both the lessor and the lessee's accounting periods end on December 31 (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Discuss the nature of this lease to Pharoah and Packer. The nature of this lease for Pharoah is a The nature of this lease for Packer is a lease. lease