Construction first provides finance and financial solutions to companies in the construction industry. On 1 January 2007 the company agreed to finance the lease of equipment costing $145,080 to Bodge Brothers over its useful life of five years at an annual rental of $39,000 payable annually in arrears. The interest rate associated with this transaction is 10% and Construction First incurred direct costs of $2,761 in setting up the lease.
Construction First agreed with the manufacturer of the equipment to pay the amount owing in 3 equal six-monthly installments beginning on 31 January 2007.

Required:
Show the entries that would appear in Construction First’s statement of income and statement of financial position (balance sheet) for the year ended 31 December 2008 together with comparative figures and an appropriate disclosure note.