Blind Co. (Blind) manufactures optometry chairs for sale and for lease. On July 1, 2019 they enter into a 6 year, non-cancellable agreement to lease 5 chairs to Red Deer Vison. (RDV).
Blind has a December 31st fiscal year-end and RDV has a June 30th fiscal year-end. Both companies depreciate their equipment on a straight-line basis and the chairs would have a nil (zero) residual value at the end of their economic life.
Terms of the lease agreement are as follows:
Blinds carrying value of the chairs (24000)					$ 24,000
Annual payments (5 chairs * $1,450 per chair) due
each July 1 (commencing 2019)					$ 7,250
Bargain purchase option after 6 years (5 chairs * $250 per chair)					$ 1,250
Economic life of the chairs					7 years
Interest rate implicit in the lease					8%
There are no unreimbursable costs likely to be incurred by the lessor and the credit risk associated with the lease is normal.
Blind follows IFRS, RDV follows ASPE.
a) Prepare all necessary journal entries at July 1, 2019, December 31, 2019 and July 1, 2020 for Blind for this lease and the related assets.
b) Prepare all necessary journal entries at July 1, 2019 and June 30, 2020 for RDV.