QUESTION 19 Eubank Company, as lessee, enters into a lease agreement on January 1, 2014, for equipment. The following data are relevant to the lease agreement: 1. The term of the noncancelable lease is 4 years, with no renewal option. Payments of $782,757 are due on January 1 of each year, starting with January 1, 2014 2. The fair value of the equipment on January 1, 2014 is $2,800,000. 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 on December 31 of each year, directly to the third parties. The executory costs are not part of the lease payments 5. Eubank's incremental borrowing rate is 10% per year. The lessee implicit rate is unknown to lessee Instructions (a) List, analyze and apply the appropriate criteria to identify the type of lease Eubank Company has entered into and what accounting treatment is applicable. (This should be much more than a one or two word response.) (b) Prepare the journal entries on Eubank's books that relate to the lease agreement for the following dates: 1. January 1, 2014 2. December 31, 2014 TT TT Paragraph Arial 3 (12pt) MEE T Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save All Answ