Accounting for Leases Haley Company (lessor) agrees to lease equipment to Grimes Company (lessee) on January 1, 2022, on a noncancelable lease. The following information relates to the lease agreement. The term of the lease is 8 years. The equipment is expected to have an economic life of 10 years. At the end of the lease, the lessee has the right to purchase the equipment for $2,000. The expected residual value at the end of the lease I $8,000. The cost of the equipment is $620,000, and the fair value of the asset on January 1, 2022, is $860,000. The lease agreement requires equal annual rental payments, beginning January 1, 2022. The collectability of the lease payments is probable. Haley desires an 6% rate of return on its investments. Grimes incremental borrowing rate is 8%. The lessor's implicit rate is unknown to lessee. Instructions: What type of lease is this to Grimes? Why? What type of lease is this to Haley? Why? Calculate the amount of the annual rental payment required by the lease. Prepare all necessary journal entries for Grimes for 2022. Prepare all necessary journal entries for Haley for 2022.