David Lid enters into a five-year lease agreement with Brothers Ltd on 1 July 2023 for an item of machinery. There is a bargain purchase option that David Ltd will be willing to exercise at the end of the fifth year for $90 000. The machinery is expected to have a useful life of six years. There are to be five annual payments of $110 000, the first being made on 30 June 2024. Included within these payments is $10 000 representing payment to the lessor for insurance and maintenance of the equipment. Additional information Implicit interest rate: 10 per cent Present value of an annuity in arrears of $1 for five years at 10 per cent = ? Present value of $1 in five years at 10 per cent =? Required (a) Determine the initial measurement of the lease liability. (3 marks) (b) Determine the initial measurement of right-of -use asset cost. (3 marks)