On December 31, 2019, Park Ltd. (lessor) leased a machine to Orange Farm Ltd. (lessee) under the following terms: Term of the lease: 3 years - Annual payments of $5,000 in advance are required from Orange Farm. The first prepayment- will be made on December 31, 2019. The following payments will be made at the end of each year (December 31). + The machine will be returned to the lessor at the end of the lease. The guaranteed residual value of the machine is $3,000, while the expected residual value at the end of the lease is $1,000.- The implicit interest rate charged by Park is 10%, which is known to Orange Farm. Orange Farm's incremental borrowing rate is 12%. The fair value of the machine on December 31, 2019 is $15,931. The useful-life of the machine is 5- years. Both Park and Orange Farm have a fiscal year-end of December 31, and both of them adopted the straight-line depreciation policy. Present value of $12 Present value of an ordinary annuity of $1e Years 10% 12% Years 10% 12% le .90909 .89286 12 90909 .89286 .82645e .79719 2e 1.735542 1.69005 3 .751312 .71178 3 2.48685e 2.40183 .68301 .63552 3.16986 3.03735e .62092e 56743 3.79079 3.60478 2e 4 se (a)-Please briefly describe the type(s) of income that Park Ltd. can make from this lease contract assuming that (1) it is a direct finance lease or (2) it is a manufacturer/dealer-type lease. (3) (b) How should this lease be classified by Orange Farm Ltd.? Please be specific about the classification criteria. (2) (c)-Please provide the joumal entries related to this lease for Orange Farm-Ltd. in 2019, 2020- and-2022. (11) (d)Please provide the joumal-entries related to this lease for Park Ltd. for 2019-and-2020, assuming that it is a professional leasing company. (7) On December 31, 2019, Park Ltd. (lessor) leased a machine to Orange Farm Ltd. (lessee) under the following terms: Term of the lease: 3 years - Annual payments of $5,000 in advance are required from Orange Farm. The first prepayment- will be made on December 31, 2019. The following payments will be made at the end of each year (December 31). + The machine will be returned to the lessor at the end of the lease. The guaranteed residual value of the machine is $3,000, while the expected residual value at the end of the lease is $1,000.- The implicit interest rate charged by Park is 10%, which is known to Orange Farm. Orange Farm's incremental borrowing rate is 12%. The fair value of the machine on December 31, 2019 is $15,931. The useful-life of the machine is 5- years. Both Park and Orange Farm have a fiscal year-end of December 31, and both of them adopted the straight-line depreciation policy. Present value of $12 Present value of an ordinary annuity of $1e Years 10% 12% Years 10% 12% le .90909 .89286 12 90909 .89286 .82645e .79719 2e 1.735542 1.69005 3 .751312 .71178 3 2.48685e 2.40183 .68301 .63552 3.16986 3.03735e .62092e 56743 3.79079 3.60478 2e 4 se (a)-Please briefly describe the type(s) of income that Park Ltd. can make from this lease contract assuming that (1) it is a direct finance lease or (2) it is a manufacturer/dealer-type lease. (3) (b) How should this lease be classified by Orange Farm Ltd.? Please be specific about the classification criteria. (2) (c)-Please provide the joumal entries related to this lease for Orange Farm-Ltd. in 2019, 2020- and-2022. (11) (d)Please provide the joumal-entries related to this lease for Park Ltd. for 2019-and-2020, assuming that it is a professional leasing company. (7)