Sunland Company, as lessee, enters into a lease agreement on July 1, 2021, for equipment. The following data are relevant to the lease agreement: 1. The term of the noncancelable lease is 4 years, with no renewal option. Payments of $900,521 are due on July 1 of each year. 2. 3. 4. The fair value of the equipment on July 1, 2021 is $3,221,250. The equipment has an economic life of 6 years with no salvage value. Sunland depreciates similar machinery it owns on the sum-of-the-years'-digits basis. The lessee pays all executory costs. 5. Sunland's incremental borrowing rate is 9% per year. The lessee is aware that the lessor used an implicit rate of 8% in computing the lease payments. Click here to view factor tables. (a) Indicate the type of lease Sunland Company has entered into and what accounting treatment is applicable.