ACCT $3230$: Problem Set #$1($Fall $2024)$Chap $17$: Accounting for Leases $($Lessee$)$Earth$,$ Inc. $($lessor$)$ and Moon Colony $2($MC$2,$ lessee$)$ signed a $20-$year non$-$cancelable lease for sky$-$projection equipment on December $27,2399.$ The lease agreement has a January $1,2400$commencement date and the following details:$1.$ The projection equipment has an estimated economic life of $32$ years$\mathrm{.}2.$ Earth, Inc. routinely leases this type of projection equipment to space colonies$\mathrm{.}3.$ The annual lease payment is $$248,600,$ payable starting January $1,2400$ and ending with a final payment on January $1,2419($for a total of $20$ annual payments$).$ MC$2($lessee$)$ made the first payment prior to commencement of the lease on December $28,2399\mathrm{.}4.$ The fair value of the projection equipment at lease commencement is $$3,000,000\mathrm{.}5.$ The lease does not contain a renewal or purchase option, and the asset reverts to Earth, Inc. at the end of the $20-$year lease period$\mathrm{.}6.$ The lease includes a guaranteed residual value clause, whereby MC$2($lessee$)$ guarantees the asset will be worth at least $$180,000$ at the end of the lease term. MC$2$ expects the asset to be worth $$156,000$ at the end of the lease term$\mathrm{.}7.$ The rate implicit in the lease $($which is known to the lessee$)$ is $8\%.$ MC$2$s incremental borrowing rate is $8\mathrm{.}5\%\mathrm{.}8.$ MC$2$ is a calendar year$-$end space colony$\mathrm{.}9.$ MC$2$ incurred $$48,000$ in legal and permitting fees to execute the lease, which they paid in cash on December $28,2399.10.$ MC$2$ was awarded a lease incentive payment of $$10,000$ to execute the lease, which they received in cash on December $29,2399.$Required $($from the lessees, MC$2)$ perspective:a$.$ Determine the appropriate lease classification.b$.$ Record the entries required in December $2399($if any$)$ for this lease.