Parravano Incorporated has leased a serging machine from Xerox Leasing Corporation for annual beginning-of-year payments of \(\$ 15,000\) for 10 years. The lease term begins on 1 January 20X2. Parravano's fiscal year ends on 31 December. Parravano's incremental borrowing rate is \(9 \%\) per annum. The fair value of a new serging machine is \(\$ 105,000\). The lease will be reported by both the lessee and the lessor as a finance lease. Parravano depreciates its separating machines on the straight-line basis, using the half-year convention.

Required:

1. Show all amounts relating to the lease and the leased asset that will appear on the statement of financial position and statement of comprehensive income of Parravano for the year ending 31 December \(20 \times 5\).

2. Show all amounts relating to the lease that will appear on the SFP and statement of comprehensive income of Xerox Leasing Corporation at 31 December 20X5. The lessor uses the gross method of recording leases. The interest rate implicit in the lease is \(9 \%\).