OVERVIEW WNTING AND ANALYSIS ASC 842 went into effect for publicly traded companies for financial period beginning after December 15, 2018. This standard updated the requirements for lease recording and reporting for both lessees and lessors. in this case, you will consider the specific details of a lease arrangement and determine the appropriate classification under ASC 842. You will also consider the impacts of this lease accounting update on financial statement analysis and ratios. INSTRUCTIONS Salaur Company, a risky start-up, is evaluating a lease arrangement being offered by TSP Company for use of a standard computer system. The lease is non-cancelable, and in no case does Salaur receive title to the computers during or at the end of the lease term. TSP will lease the returned computers to other customers. The lease starts on January 1, 2020, with the first rental payment due on January 1, 2020. Additional information related to the lease and the underlying leased asset is as follows: 5 years Lease Data Yearly rental $3,057.25 Lease term 3 years Estimated economic life Purchase option $3,000 at end of 3 years, which approximates fair value 1 year at $1,500; no penalty for nonrenewal; Renewal option standard renewal clause Fair value at commencement $10,000 Cost of asset to lessor $8,000 Residual value: Guaranteed $3,000 Unguaranteed Lessor's implicit rate (known by the 12% lessee) $3,000 Estimated fair value at end of lease Answer the following questions: the lence classification tests for this lease for Salaur. Prepare the journal entries for Salaur for 2020. the requirements in question 1, assuming Salaur has the option to purchase the system at the end of the 2. Repeat the requirements in questi lease for $100. e discuss the impact of the accounting for this lease as a finance or operating lease for two common ratios: return on assets and debt to total assets. what fundamental quality of useful information is being addressed when a company like Salaur capitalizes all leases with terms of one year or longer? Properly cite any sources used. 1. Analyze the lease classification 3. Briefly discuss