4.On 1 July 2010, Akilia Ltd leased a plastic-moulding machine from Warming Ltd. The m Warming $130,000 to manufacture and had a fair value of $154,109 on 1 July 2010. The agreement contained the following provisions: Lease term 4 years Annual rental payment, in advance on 1 July each year $41,500 Residual value at end of the lease term $15,000 Residual guaranteed by lessee nil Interest rate implicit in the lease 8% The lease is cancellable only with the permission of the lessor. The expected useful life of the machine is 6 years. Akilia Ltd intends to return the machi lessor at the end of the lease term. Included in the annual rental payment is an amount cover the costs of maintenance and insurance paid for by the lessor. Required - Classify the lease for both lessee and lessor. Justify your answer. Prepare (a) the lease schedules for the lessee and (b) the journal entries in the books for the year ended 30 June 2011. (Alfredson, Leo, Picker, Loftus, Clark and Wise, 2009)