The XW Company leases a car to Active Corp. on January 1, 2021. The term of the non-cancelable lease is six years. The following information about the lease is provided:

1. Title to the car passes to Active Corp. at the end of the lease term with no additional payment required by the lessee.
2. The cost and fair value of the car to the XW Company is $84,000. The car has an economic life of ten years.
3. The lease payments are determined at an amount that will yield XW Company a rate of return of 10% on its net investment.
4. Collectability of the lease payments is reasonably assured.
5. Equal annual lease payments are due at the end of each year.

Required

1. What type of lease is this for XW Company? Why?
2. Prepare a table summarizing the lease receipts and interest revenue earned by the XW Company for the four-year lease term.

Prepare the journal entries for 2021 and 2022 to record the lease agreement, the lease receipts, and the recognition of income on the books of XW Company