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On 1 July 2022, ABC leased a fish heat treatment machine from Wendy LTD. The...

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Accounting

On 1 July 2022, ABC leased a fish heat treatment machine from Wendy LTD. The machine cost Wendy Ltd $85,000 to manufacture and had a fair value of $97,055 on 1 July 2022. The lease agreement:

Lease term 4 years

Annual rental payment, in advance on 1 July each year $26,250

Residual value at end of the lease term $7,500

Residual guaranteed by lease nil

Interest rate implicit in lease 8%

The lease is cancellable only with the permission of the lessor

The expected useful life of the machine is 5 years. ABC intends to return the machine yo Wendy at the end of lease term. Included the annual rental payment is an amount of $1,250 to cover the costs of maintenance and insurance paid for by the lessor

A) prepare the lease payment scheduled for ABC

B) prepare the journal entries in the books of ABC for the year ended 30 June 2023 in accordance with AASB 16

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