ABC Ltd (the lessee) enters a lease contract with XYZ Ltd (the lessor).

The following information is given:

Lease term: 4 years;

Upfront payments: $80,000;

Costs of entering into the lease; $30,000;

Costs of making assets ready for use; $20,000;

Periodic lease payments: $120,000 including a service component $10,000, paid at the end of the year;

Bargain purchase option: $50,000;

Interest rate: 6%.

Additional information:

ABC is likely to exercise the bargain purchase option at the end of the lease.

The asset is expected to have a 6-year useful life in total, with a $100,000 residual value at the end of the asset life.

1)The value of the lease liability for future amortisation is:

2)The fair value of the leased asset is:

3)The annual depreciation of the leased asset is:

4)Provide journal entries for ABC Ltd's entry of the lease at the inception.

5)Provide journal entries for year 2 on ABC Ltd's accounting book.

6)Provide journal entries for year 4 on ABC Ltd's accounting book.