Case Study 2 Total: 25 Marks) Accounting for leases Aloha Ltd is an Australian mining company listed on the ASX. The company is an exporter of iron ore to overseas steel mills. The company's functional currency is AU $ and its financial year ends on 30 June. I On 1 July 2019, Aloha Ltd leased a machine from Edmund Ltd for a period of six years. The machine has an estimated useful life of six years and a residual value of zero. The normal selling price (fair value) of the machine is $72 000 and the cost of goods in Edmund Ltd's books was $52 000. Aloha Ltd agreed to make annual payments of $15 000, commencing from 1 July 2019. The lease contract includes a service contract for the ongoing annual maintenance of the machine. However, Aloha Ltd has elected to use the practical expedient provision available in paragraph 15 of AASB 16, and will treat it as a single lease. The interest rate implicit in the lease is 10%. Required: Answer all 3 questions below: 1. Define a Lease, and identify five key provisions that are likely to be included in a lease agreement. (5 Marks) 2. Show general journal entries to record the lease transaction for the first two years in the books of Aloha Ltd (Lessee). (10 Marks) Required: Answer all 3 questions below: 1. Define a Lease, and identify five key provisions that are likely to be included in a lease agreement. (5 Marks) 2. Show general journal entries to record the lease transaction for the first two years in the books of Aloha Ltd (Lessee). (10 Marks) 3. Show general journal entries to record the lease transaction for the first two years in the books of Edmund Ltd (Lessor). (10 Marks)