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Question 2 (10 marks) Telstra Ltd enters into a non-cancellable five-year lease agreement with Optus...

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Question 2 (10 marks) Telstra Ltd enters into a non-cancellable five-year lease agreement with Optus Ltd on 1 July 2019. The lease is for an item of machinery that, at the inception of the lease, has a fair value of $1,294,384. e machinery is expected to have an economic life of six years, after which time it will have an expected residual value of $210,000. There is a bargain purchase option that Telstra Ltd will be able to exercise at the end of the fifth year for $280,000. There are to be five annual payments of $350,000, the first being made on 30 June 2020 Included within the $350,000 lease payments is an amount of $35,000 representing payment to the lessor for the insurance and maintenance of the equipment. The equipmet s to be depreciated on a straight-line basis. The implicit rate is 12 per cent. repare the journal entries in the books of Telstra Ltd for the years ending 30 une 2020and 30 Required: June 2021. (10 marks)

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