Socit franais de oil and gas is an energy exploration company in western France. The company explores for oil and gas on the European continent. Discussions have taken place at the level of the company's board of directors regarding a qualitative shift in the field of energy exploration to meet the growing demand in the region. This is due to the relatively high prices of Russian gas, which is a major source of energy in Europe. The French oil and gas company decided to explore for shale oil in France first, and then move to Italy and Greece. Shale oil extraction requires specialized equipment that can drill and break hard rock so that the oil can be extracted. The only company that rents this specialized equipment is Germany Rental, which is located in Germany. On January 1, 2023, the French oil and gas company decided to lease drilling rigs from Germany Hire. The two companies have agreed that the lease term is 8 years and that it must pay annual installments of $1,200,000 on January 1, 2023 and every December 31 thereafter. The details of the agreement indicate that the agreed interest rate between the two companies is 6%. Additional details show that the useful life of the machines is 15 years with no residual value. It is important to mention that Germany Rental Company recently purchased these machines for $16,455,950. On the date of signing the contract between the two companies, the director of Germany Leasing Company told the representative of the French Oil and Gas Company the following: It is interesting that your company wants to rent these machines at this time. As you know, these machines are specialized and there are only a few companies in the world that can use them. However, today there is an American company called Texas Shell that has rented a similar amount of The machinery that you have leased. It is also surprising that all the terms of the Texas Shell lease are identical to the terms signed by your company. The only difference is that the French oil and gas company is located in France, while Texas Shell is located in the United States." Required

1. With regard to renting machinery, determine the appropriate classification of the lease contract by the lessee companies with an explanation of the reason behind this classification, and then analyze the amount and type of expenses that will be recorded by the lessee companies (French Oil and Gas Company and Texas Shell) during the lease term In full (with showing these expenses for each year separately).

2. In the event that these machines are not specialized, what is the appropriate classification of the lease contract by the renting companies (French Oil and Gas Company and Texas Shell Company) according to this situation? Also, determine the amount and type of expenses that the two companies had to disclose during the entire lease period, and compare your answer with the answer of the previous requirement to determine which types of lease contracts lead to the disclosure of greater profits for both companies?