Question: Winston Industries and Ewing SA enter into an agreement that requires Ewing to build three diesel- electric engines to Winston's specifications. Upon completion of the engines, Winston has agreed to lease them for a period of 10 years and to assume all costs and risks of ownership. The lease is non-cancelable, becomes effective on January 1, 2022, and requires annual rental payments of 355.647 each January 1, starting January 1, 2022. The implicit interest rate used by Ewing is 4% and unknown to Winston. Winston's incremental borrowing rate is 5%. The total cost of building the three engines is 2,600,000. The economic life of the engines is estimated to be 10 years, with residual value set at zero. Winston depreciates similar equipment on a straight-line basis. At the end of the lease, Winston assumes title to the engines. Collectibility of the lease payments is probable. Required: (Round all amounts to the nearest euro.) (a) Discuss the nature of this lease transaction to the lessor. (b) Compute the initial value of the lease liability to the lessee. (e) Prepare the journal entries Winston would make in 2022 and 2023 related to the lease arrangement. (Prepare a lease amortization schedule for 2 years.) (d) Prepare the journal entries Ewing would make in 2022 and 2023 related to the lease arrangement. (Prepare a lease amortization schedule for 2 years.) (e) Assume that Winston incurs legal fees related to the execution of the lease of 30,000. In addition, assume Winston receives a lease incentive from Ewing of 50,000 to enter the lease. Compute the value of the lease liability and the value of the Right-of-Use asset to the lessee at the commencement of the lease