Question 2 -Lessor Accounting (13 Marks) On August 1, 2021, Lucy Corporation leased a machine to the Linus Piano Company. Under the terms of the contract, annual lease payments are due on July 31 of each year, starting July 31, 2022. At the end of the lease term, the leased asset reverts back to Lucy Corporation. Lucy Corporation has a December 31 year end and follows ASPE. Other terms of the lease are as follows: Amount of residual value guarantee made by Linus Piano Company 5,307 Fair value of machine at inception of the lease $ 212,289 Cost of the machine to Lucy Corporation $ 212,289 Fair value of machine at end of asset's economic life $ 5,307 Lease term (in years) 8 Estimated useful life of the machine (in years) 9 Linus Piano Company's incremental borrowing rate 6% 5% Interest rate implicit in the lease Lucy Corporation has determined that the collectibility of the lease payments is reasonably predictable and that no additional costs will be incurred. Required: 1. What type of lease is this for the lessor? Justify your answer. (2.5 marks) 2. Calculate the amount of each annual lease payment. (2 marks) 3. Prepare a lease amortization schedule for Lucy Corporation for the first 2 years of the lease. (2 marks) 4. Prepare the journal entries on Lucy Corporation's books for the lease on each of the following dates. August 1, 2021 (2.5 marks) December 31, 2021 (2 marks) July 31, 2022 (2 marks)