Argyle Ltd. signed a 24-month lease to rent a new computer for $170 per month. The fair value of the computer is $3,600. The lease will commence on 1 November 20X1 with payments beginning immediately. Assume that Argyle Ltd.’s IBR is 0.7% per month. Argyle is unaware of the implicit rate in the lease.

Required:
1. Is Argyle Ltd. able to account for this lease as a low-value lease? If so, what journal entry would be recorded?
2. Repeat requirement 1 assuming that instead of having to pay $170 per month, Argyle Ltd. is able to find a used computer for $120 per month. The fair value of the asset in its current condition is $2,600 but when new, the computer costs slightly over $5,500.