REFO20 Lessor Ltd manufactures machinery for both sale and lease. On 1 July 2020, Lessor Ltd leased a machine to Lessee Ltd. The terms of the lease are presented in the following table. $21,000 Cost to Lessor to manufacture the machine Fair value of machine at initiation of the lease $55,638 Initial direct costs incurred by Lesson $2,100 Duration of lease in years 5 Economic useful life of the machine in years 6 Annual lease payment, payable at the end of each year $14,000 $1,200 Executory costs to be paid by lessee to lessor to reimburse lessor for insurance Economic useful life of the machine in years 6 $14,000 Annual lease payment, payable at the end of each year Executory costs to be paid by lessee to lessor to reimburse lessor for insurance and maintenance costs (included in the annual payment above) $1,200 Estimated residual value of machine at end of lease term $9,000 Residual value guaranteed by lessee $2,000 Interest rate implicit in the lease 9% The lease was non-cancellable NB: Round all your answers to the nearest dollar amount. REQUIRED (a) What is the definition of a finance lease? (1 mark) REQUIRED (a) What is the definition of finance lease? (1 mark) (b) Provide three reasons or indicators that support Lessor Ltd.'s classification of the lease as a finance lease. (1.5 marks) (c). Should Lessee Ltd classify the lease as a finance lease or as an operating lease? Justify your answer. (1 mark) (d) Prove that the interest rate implicit in the lease provided in the table above is correct. (1.5 marks) (e) Determine the lease receivable for Lessor Ltd at the inception of the lease. (1 marks) (f) Prepare the journal entries in the records of Lessor Ltd to account for the lease in the first year of the lease including initiation of the lease. (9 marks) (g) Determine the lease liability for Lessee Ltd for the first year of the lease. (1 marks) Prepare the journal entries in the records of Lessee Ltd to account for the lease in the first year of the lease including initiation of the lease and in the last year of the lease. (15 marks)