NEED ASSISTANCE WITH REQUIRED 4 LESSEE, REQUIRED 4 LESSOR, REQUIRED 5 LESSEE **Lease Agreement between Rhone-Metro Industries and Western Soya Co.****Overview:**Rhone-Metro Industries leases equipment to Western Soya Co. as of December 31, 2021, for a four-year non-cancelable term, ending December 31, 2025. At lease end, the asset returns to Rhone-Metro unless a purchase option is executed by Western Soya Co. The equipment was manufactured at a cost of $300,000 with an expected useful life of six years. Anticipated residual value by December 31, 2025, is $25,000, but not guaranteed.**Purchase Option:**Western Soya Co. has an option to purchase the equipment on December 30, 2024, for $10,000, with annual lease payments structured at $128,000 including $3,000 in annual maintenance costs. Payments are due every December 31, with the first being on December 31, 2021.**Interest Rates and Amortization:**- Western Soya’s borrowing rate: 10%- Implicit lease rate: 9%- Amortization method: Straight-line**Helpful Note:**The accounting term of a lease ends when a purchase option is expected to be exercised, referred to as a BPO (Bargain Purchase Option).**Required Tasks for Analysis:**1. **Calculate Annual Lease Payments:** Detail the method by which Rhone-Metro derived the $128,000 yearly lease payment. 2. **Lease Classification:** - Lessee (Western Soya Co.) - Lessor (Rhone-Metro Industries) 3. **Appropriate Entry Preparation:** Record initial entries on December 31, 2021, for both companies.4. **Amortization Schedule Preparation:** Illustrate the interest payment pattern throughout the lease for both parties.5. **Second Payment and Amortization Entries:** Document entries for both companies on December 31, 2022.6. **Option Exercise Entries:** Prepare entries for December 30, 2024, if the purchase is executed.**Interactive Section:**Students are encouraged to input data into specific tabs labeled "Required 1" through "Required 6" for Lessees and Lessors, following the prompts to enhance understanding of lease accounting processes.**Tables and Graphs:**The provided image contains a table for data input related to calculating

What is meant by Lease? The agreement under which the owner of the asset provides the asset to other…

Rhone-Metro Industries manufactures equipment that is sold or leased. On December 31, 2021, Rhone-Metro leased equipment to Western Soya Co. for a noncancelable stated lease term of four years ending December 31, 2025, at which time possession of the leased asset will revert back to Rhone-Metro. The equipment cost $300,000 to manufacture and has an expected useful life of six years. Its normal sales price is $352,611. The expected residual value of $25,000 at December 31, 2025, is not guaranteed. Western Soya Co. is reasonably certain to exercise a purchase option on December 3O, 2024, at an option price of $10,000. Equal payments under the lease are $128,000 (including $3,000 annual maintenance costs) and are due on December 31 of each year. The first payment was made on December 31, 2021. Western Soya's incremental borrowing rate is 10%. Western Soya knows the interest rate implicit in the lease payments is 9%. Both companies use straight-line amortization. Hint: A lease term ends for accounting purposes when an option becomes exercisable if it's expected to be exercised (i.e., a BPO). (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Show how Rhone-Metro calculated the $128,000 annual lease payments. 2. How should this lease be classified (a) by Western Soya Co. (the lessee) and (b) by Rhone-Metro Industries (the lessor)? 3. Prepare the appropriate entries for both Western Soya Co. and Rhone-Metro on December 31, 2021. 4. Prepare an amortization schedule(s) describing the pattern of interest over the lease term for the lessee and the lessor. 5. Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 31, 2022 (the second rent payment and amortization). 6. Prepare the appropriate entries for both Western Soya and Rhone-Metro on December 30, 2024, assuming the purchase option is exercised on that date. Complete this question by entering your answers in the tabs below. Required 2 Required 3 Lessee Required 3 Required 4 Lessor Required 4 Lessor Required 5 Lessee Required 5 Lessor Required 6 Lessee Required 6 Lessor Required 1 Lessee Show how Rhone-Metro calculated the $128,000 annual lease payments. (Round your intermediate and final answers to arest whele dellar)