On $1/1/2012$ Knicks, Inc. enters into a $10-$year non$-$cancelable lease for a piece of machinery owned by Magic Lease, Inc. The lease calls for annual payments of $$25,000,$ payable at the end of each year of the lease, and Knicks, Inc. have the option to renew the lease for an additional $10-$year term at a continued rate of $$20,000$ per year $($not a bargain$).$ At the end of the lease, ownership and the right to use the machine transfers to Knicks, Inc. There is no option to purchase the machine at a bargain at the end of the lease. Magic Lease, Inc. purchased this machine on $12/31/2011$ from Hawks, Inc. for $$140,471\mathrm{.}60,$ and the economic life of the machine is believed to be $20$ years. Both Knicks, Inc. and Magic Lease, Inc. use a weighted average cost of capital of $7\%$ for discounting purposes. What type of lease is this from the perspective of Magic Lease, Inc.? What $($if any$)$ journal entry$($ies$)$ should Magic Lease, Inc. record on $1/1/2012?$ What $($if any$)$ journal entry$($ies$)$ should Magic, Inc. record on $12/31/2012?$ What $($if any$)$ journal entries should Magic, Inc. Record on $12/31/2013?$