QUESTION 3 Taylor Co. purchased a machine on January 1, 2020, for $3,500,000 for the purpose of leasing it. The machine is expected to have a ten-year life, no salvage value, and be depreciated on a straight-line monthly basis. On April 1, 2020, under a non-cancelable lease, Taylor leased the machine to Rogers Company for $750,000 a year for a four- year period ending March 31, 2024. The annual lease payment is due at each April 1, starting from April 1, 2020. Rogers's incremental borrowing rate is 8%, however it knows that Taylor's implicit interest rate is 7%. There is no bargain purchase option, ownership of the lease does not transfer at the end of the lease term and the asset is not of a specialized nature. PV Annuity Due 3.62432 3.57710 PV Ordinary Annuity 3.38721 3.31213 PV Single Sum 0.76290 0.73503 7%, 4 periods 8%, 4 periods Instructions: (please clearly indicate the factors you used in the factor table, show your calculation for partial credits and round your answers to the nearest dollar) A. Assuming an operating lease, what should be the initial measurement of lease liability for Rogers (Lessor) at the commencement of the lease (April 1, 2020)? B. Prepare journal entries for Rogers to record (1) the commencement of the lease on April 1; (2) the lease payment on April 1 and (3) lease expense for 2020. (Hint 1: Lease Amortization Schedule and Lease Expense Schedule would be helpful. Hint 2: Pay attention to the date for partial year calculation.)