1. PROBLEM (Recommended Time Allocation: 25 Minutes, 13 Marks) Albert Corp., a private corporation that adheres to ASPE, is a manufacturer of truck trailers. On January 1, 2020, Albert leases ten trailers to Einstein Inc. under a six-year non-cancellable lease agreement. The following information about the lease and the trailers is provided: Equal annual payments (due on December 31 each year) will be payable, to provide Albert with an 8% retum on their investment. 2 Title to the trailers will pass to Einstein at the end of the lease. 3. At January 1, 2020, the fair value of each trailer is $ 50,000. The cost of each trailer to Albert Corp. is $ 45,000. Each trailer has an expected useful life of nine years. 4. Collectibility of the lease payments is reasonably assured, and any unreimbursable costs under the lease that are likely to be incurred by Albert can be reasonably estimated. Instructions a) What type of lease is this for the lessor? Discuss. b) Calculate the annual lease payment. Round to the nearest dollar c) Prepare the journal entries for the lessor for 2020 and 2021 to record the lease agreement, the receipt of the lease rentals, and the recognition of income. Assume the use of a perpetual inventory system and round all amounts to the nearest dollar