Skysong Manufacturing Ltd. has signed a lease agreement with LPN Leasing Inc. to lease some specialized manufacturing equipment. The terms of the lease are as follows:

?		The lease is for 5 years commencing January 1, 2017.
?		Skysong must pay LPN $64,853 on January 1 of each year, beginning in 2017. This amount includes an annual charge of $4,000 for maintenance and insurance on the equipment.
?		Equipment of this type normally has an economic life of 9 years.
?		LPN has concluded, based on its review of Skysongs financial statements, that there is no unusual credit risk in this situation. LPN will not incur any further costs with regard to this lease.
?		LPN purchases this equipment directly from the manufacturer at a cost of $222,200, and normally sells the equipment for $270,000.
?		Skysongs borrowing rate is 10%. LPNs implied interest rate is 9%, which is known to Skysong at the time of negotiating the lease.
?		Skysong uses the straight-line method to depreciate similar equipment.
		Both Skysong and LPN have calendar fiscal years (year end December 31), and follow ASPE. 1. From Skysong Manufacturings perspective, is this a capital or operating lease? 2. Prepare a lease amortization schedule for this lease. 3. Prepare the journal entries on Skysong Manufacturings books on January 1, 2017 4. Prepare the journal entries on LPN Leasings books on January 1, 2017. 5. Prepare the journal entries for Skysong Manufacturing on December 31, 2017. 6. Prepare the journal entry on LPN Leasings books on December 31, 2017.