On 1 July 2023, Flyer Ltd decides to lease an aeroplane from Finance Ltd. The term of the lease is 20 years. The implicit interest rate in the lease is 10 per cent. It is expected that the aeroplane will be scrapped at the end of the lease term. The fair value of the aeroplane at the commencement of the lease is $2 428 400. The lease is non-cancellable, returns the aeroplane to Finance Ltd at the end of the lease, and requires a lease payment of $300 000 on inception of the lease (on 1 July 2023) and lease payments of $250 000 on 30 June each year (starting 30 June 2024). There is no residual payment required. 

REQUIRED

a. Provide the journal entries for the lease in the books of Flyer Ltd as at 1 July 2023.

b. Provide the journal entries for the lease in the books of Finance Ltd as at 1 July 2023.

c. Provide the journal entries in the books of Flyer Ltd for the final year of the lease (that is, the entries in 20 years’ time).

d. Provide the journal entries in the books of Finance Ltd for the final year of the lease (that is, the entries in 20 years’ time).