Company A sells a machine to Company B for its fair value of $ 2,000,000 on January 1,2018

Company A immediately leases the machine back for 5 years

The useful life of the machine is 7 years

The implicit rate is 7% and the incremental borrowing rate is 6% (assume both rates are known to lessee)

The machine was recorded on Company A's books at$ 1,400,000

The residual value at the end of 5 years is expected to be $ 400,000 and is not guaranteed

Assuming the annual payments are at the beginning of the period are what is the lease payment Company B would charge Company A?

Using IFRS give the initial journal entries for Company B

Using ASPE give the initial journal entries for Company B

Using IFRS give the initial journal entries for Company A

Using ASPE give the initial journal entries for Company A