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Agri Machinery P/L enters into a lease (to a lessee) agreement and leases harvesting equipment to...

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Accounting

Agri Machinery P/L enters into a lease (to a lessee) agreementand leases harvesting equipment to Grain Holdings Ltd. The leaseconsists of the following; ? Date of inception: 1/1/13 ? Durationof lease: 4 years ? Life of leased asset: 5 years ? Lease payments(annual): $160,000 (annual) includes $15,000 for maintenance andinsurance costs per annum. ? $70,000 (added to final payment) ?Implicit rate of interest is 11.5% (is this the actual rate) ? Fairvalue: $490,384 The asset was acquired on 12/11/2012 Required; a)Check that the implicit rate is correct against FV. b) Dothe journal entries for the Lessor (using the Net Method) foracquisition,

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