$17.$ Burt Ltd enters into a non$-$cancellable five$-$year lease agreement with Earnie Ltd on $1$ July $2023.$ The lease is for an

item of machinery that, at the inception of the lease, has a fair value of $$1294384.$

The machinery is expected to have an economic life of six years, after which time it will have an expected

residual value of $$210000.$ There is a bargain purchase option that Burt Ltd will be able to exercise at the end of the

fifth year for $$280000.$

There are to be five annual payments of $$350000,$ the first being made on $30$ June $2024.$ Included within

the $$350000$ lease payments is an amount of $$35000$ representing payment to the lessor for the insurance and

maintenance of the equipment. The equipment is to be depreciated on a straight$-$line basis.

REQUIRED

$($a$)$ Determine the rate of interest implicit in the lease and calculate the present value of the lease payments.

$($b$)$ Prepare the journal entries in the books of Burt Ltd for the years ending $30$ June $2024$ and $30$ June $2025.$

$($c$)$ Prepare the portion of the statement of financial position for the year ending $30$ June $2025$ relating to the lease

asset and lease liability. LO $11\mathrm{.}2,11\mathrm{.}3,11\mathrm{.}4,11\mathrm{.}5,11\mathrm{.}6,11\mathrm{.}7$