On 1^st January,2004, Haden Company (as lessor) entered into a non-cancelable lease agreement with Sandy Corporation for machinery which was taken on the accounting records of Haden at $4,530,000 and had a market value of $4,800,000. Minimum lease payments under the lease agreement which expires on 31^st December,2013, total $7,100,000. PAYMENTS of $710,000 are due every January 1. The first payment was made on 1^st January, 2004 when the lease agreement was finalized. The interest rate of 10 percent which was stipulated in ths lease agreement is the implicit rate set by the lessor. The effective interest technique of amortization is being used. Sandy expects the machines to have a ten year life with no salvage value, and be depreciated on a straight-line basis. Collectability of the rentals is reasonably predictable, and there are no important uncertainties surrounding the costs yet to be incurred by the lessor.

a, From the lessee's viewpoint, what type of lease is the above agreement. From the lessor's viewpoint, what type of lease is this agreement?

b. What could be the income before income taxes derived by Haden from the lease for the year ended 31^st December,2004?

c. Ignoring income taxes, what could be the expenses incurred by Sand from the lease for the year ended 31^st December,2004?

d, Show journal entries would be recorded by Sandy Company for all of 2004?

e. Show journal entries would be recorded by haden Company for all of 2004?