Prepare the journal entries Leasing AG would make in 2020 related to the lease arrangement.
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Step 1The contract between lessor and lessee to use the asset for a certain period of time, and for a specified sum of money is known as Lease Contract. There are majorly two type of lease contract: finance lease and operating lease.  Step 2The journal entries for the finance lease are as follows:DateParticularAmountAmountJan 1, 2020Equipment$1,750,000        Cash $437,500       Lease liability $1,312,500 (To record the equipment at present value)  Dec 31, 2020Depreciation expense $1,312,500-$100,000/8$151,562.50        Accumulated depreciation $151,562.50 (To record depreciation for lease for the period)  Dec 31, 2020Interest expense (5% of lease liability)$65,625        Interest payable $65,625 (To record accrual of interest expense)   ...