ABC Ltd. sells apple picking machines for $270,000. The machines have a useful life of 10 years.

XYZ Ltd. decides to lease a machine from ABC Ltd for a period of 9 years by way of a non-cancellable lease. The lease commenced on 1 July 2012. The lease payments, including reimbursement of ABC Ltd.'s maintenance costs of $10,000 per annum, are made at the end of each year and amount to $65,000. There is an unguaranteed residual at the end of the lease term of $45,000.

Required:

According to the requirements of AASB 16:

a). Confirm the interest rate implicit in the lease is 10% and show your calculations.

b). Prepare the lease payment schedule for the life of the lease.

c). Record entries in general journal form to record the lease transactions at 1 July 2011 and at 30 June 2012 for XYZ Ltd.

d). Show what would be reported in the statement of financial position for XYZ Ltd at 30 June 2012.