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Problem 6 Santa Fe Lessee Co. enters a non-cancelable lease agreement with Zion Co. on...

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Problem 6 Santa Fe Lessee Co. enters a non-cancelable lease agreement with Zion Co. on January 1, 2021, under which Zion Co. leases equipment to Santa Fe Lessee Co. Information pertaining to the lease is provided below: - Useful life of the leased asset: 17 years - Lessor's (Zion Co.'s) interest rate (known by the lessee): 8% - Lessee's incremental borrowing rate: 9% - Cost and fair value of leased asset: $71,000 - Lease payment: $9,667 per year, due at the beginning of each year - Lease term is 8 years - Lease contains no bargain purchase option, no transfer of ownership, the leased asset is not of a specialized nature Part A. What is the correct classification of this lease from the perspective of both the lessee and lessor? Part B. Prepare all entries for the lessee for the first year of the lease. Additionally, prepare the amortization schedules for the lessee's lease liability and right of use asset

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