Chirp Limited (hereafter 'Chirp') is a South African company with a 30 June financial year- end Chirp manufactures and sells bird food throughout the country Below are the details with regards to the lense agreements Chirp is currently a party of AGREEMENT 1 On 1 June 2019 Chirp entered into a three year contract with Wheels Ltd, a road transport company, for the use of ten vehicles to deliver orders of customers around the country, The model and capacity of the vehicles are specified in the contract and the vehicles are branded in the corporate colours of Chirp Chip provides its own drivers The vehicles are parked at Chlep's factory when not in use and can be used for storage or to transport goods of other manufacturers. Wheels Lid cannot take back a vehicle during the contract period. Il a particular vehicle needs servicing or repair, Wheels Ltd is required to substitute a vehicle of the same type AGREEMENT 2 Chirp entered into a contract with Speedpoint Limited for the lease of twenty point-of-sale devices. The contract was entered into on 1 September 2019 for a three year period. Each item is of a low value and Chirp applies the low value exemption of IFRS 16 Leases. The benefit derived for Chirp from the lease agreement is consistent over the lease period. The following amounts are payable to Speedpoint Limited per the lease agreement From 1 September 2019 to 31 August 2020 R2 000 per month From 1 September 2020 to 31 August 2021: R3 000 per month From 1 September 2021 to 31 August 2022. R3 400 per month AGREEMENT 3 Chirp entered into a contract for the lease of a machine with Pack-It Limited that will automate the entire packaging process. The lease is non-cancellable and Chirp will make all decisions on how to use the machine. Pack-It Limited does not have substitution rights The contract was entered into on 1 July 2020 for a period of four years and required Chirp to pay lease rentals of R200 754 annually, in advance. Chirp accounts for machines on the cost model as per IAS 16 Property, plant and equipment and expects to drive the benefits from using the machine evenly over its useful life. It has an estimated useful life of four years with no residual value The effective interest rate applicable to this lease agreement is 10% per annum MARKS [12.01 REQUIRED: a) Discuss, with reference to IFRS 16 Leases, whether the arrangement as per AGREEMENT 1 contains a lease. b) Prepare the journal entries in the accounting records of Chirp Limited to account for the lease as per AGREEMENT 2 for the financial year ended 30 June 2021. Dates and narrations are required Show ALL calculations Calculation marks will NOT be awarded it the calculation is not shown! c) Prepare the journal entries in the accounting records of Chirp Limited to account for the lead as per AGREEMENT 3 for the financial year ended 30 June 2021 Dates and narrations are required. Show ALL calculations! Calculation marks will NOT be awarded if the calculation is not shown! [11.01 [17.0)