Question: Problem 2 ( 2 5 points ) Landmark leased an equipment from Efficient Machine on January 1 , 2 0 2 4 . The 4

Problem

2 (25

points

)

Landmark leased an equipment from Efficient Machine on January

1, 2024 .

The

4 -

year lease agreement specifies annual lease payment of $

5, 000

on January

1, 2024

and December

31

2024, 2025,

and

2026 .

The equipment was recently purchased by Efficient Machine for $

24, 000 .

The equipment is expected to have a useful life of

6

years with no residual value. Straight

-

line method is used by Efficient Machine for depreciation. Efficient Machine uses a

10 %

implicit interest rate and Landmark is aware of this rate. Adjusting entries are prepared at the end of each year. Round your answers to the nearest whole dollar.

(1)

How should the lease be classified?

Problem 2 ( 2 5 points ) Landmark leased an

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