Question-1 The following facts pertain to a noncancelable lease agreement between White Leasing Company and Gega Company, a lessee. Inception date: May 1, 2012 Annual lease payment due at the beginning of each year, beginning with May 1, 2012 $18,829.49 Bargain-purchase option price at end of lease term $ 4,000.00 Lease term 5 years Economic life of leased equipment 10 years Lessor's cost $65,000.00 Fair value of asset at May 1, 2012 $81,000.00 Lessor's implicit rate 10% Lessee's incremental borrowing rate 10% The collectability of the lease payments is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor. The lessee assumes responsibility for all executory costs. Instructions (a) Discuss the nature of this lease to Gega Company. (b) Discuss the nature of this lease to White leasing Company. (c) Prepare a lease amortization schedule for Gega Company for the 5-year lease term. (d) Prepare the journal entries on the lessee's books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2012 and 2013.lessee annual accounting period ends on December 31. Question-2 Five Star Leasing Company signs an agreement on January 1, 2012, to lease equipment to Red Company. The following information relates to this agreement. 1. The term of the noncancelable lease is 6 years with no renewal option. The equipment has an estimated economic life of 6 years. 2. The cost of the asset to the lessor is $343,000. The fair value of the asset at January 1, 2012, is $343,000. 3. The asset will revert to the lessor at the end of the lease term at which time the asset is expected to have a residual value of $61,071, none of which is guaranteed. 4. Red Company assumes direct responsibility for all executory costs. 5. The agreement requires equal annual rental payments, beginning on January 1, 2012. 6. Collectability of the lease payments is reasonably predictable. There are no important uncertainties surrounding the amount of costs yet to be incurred by the lessor. Instructions (a) Assuming the lessor desires a 10% rate of return on its investment, calculate the amount of the annual rental payment required. (b) Prepare an amortization schedule that would be suitable for the lessor for the lease term.