Recording Entries for Finance Lease-No Residual, Renewal Terms On January 1, 2020, Lessee Inc. enters into a 5-year equipment lease agreement for $15,000 annually (first payment due immediately). The lease grants the lessee an option to renew the lease for an additional 3 years. Lease payments adjust to current market rates for equivalent rentals at the time of renewal. Lessee Inc. is reasonably certain that it will exercise the renewal option due to the customization of the equipment. The estimated useful life of the equipment is 10 years. The lessee is not aware of the implicit rate of the lease, but the lessee's incremental borrowing rate is 6%. a. How would Lessee Inc. classify the equipment lease? Amortization Schedule Journal Entries b. Prepare an amortization schedule of the lease liability, Note: Round each amount in the schedule to the nearest whole dollar. Use the rounded amount for later calculations in the schedule. Note: Include any net rounding difference to Lease Liability in the Interest on Liability amount for Jan. 1, 2027. Interest Reduction of on Liability Lease Liability Lease Liability $ $ $ Lease Date Payment Jan. 1, 2020 Jan. 1, 2020 $ Jan. 1, 2021 Jan. 1, 2022 Jan. 1, 2023 Jan. 1, 2024 Jan. 1, 2025 Jan. 1, 2026 Jan. 1, 2027 Total $ $ $ Note: Round your answers to the nearest whole dollar. Date Account Name Dr. Cr. Jan. 1, 2020 To record asset and liability related to lease Jan. 1, 2020 To record lease payment Dec. 31, 2020 . To record interest Dec. 31, 2020 - To record amortization Jan. 1, 2021 To record lease payment Dec. 31, 2021 - To record interest Dec. 31, 2021 To record amortization