rision of the head of school or n written ave available for inspection _ Az-nvS of receiving -s student on that 1 octurer, worl five his thc the 5 BFA605 -- Financial and Corporate Accounting e Question 3 Shipbuilders Ltd leased a machine from Sails Ltd on 1 July 2015, The lease qualifies as a finance lease and requires ten annual payments of $20,000 beginning immediately. The lease specifies an interest rate of 12% and a purchase option of $20,000 at the end of the ninth year, even though the machine's estimated value on that date is $40,000. The machine has a useful life of twelve (12_rs) and a fair value of $150,000. It will be depreciated on a straight line basis. Required a Why is this lease classified as a finance lease rather than an operating lease? [3 marks] b As you have to account for an expense no matter what type of lease, why is it important to know what type of lease it is? [2 marks] c VVhat amount should Shipbuilders Ltd record as the lease liability at the beginning of the lease term? [3 marks] d According to the requirements of AASB 117, prepare general journal entries jn the books of the lessee, Shipbuilders Ltd for 30 June 2016. Narrations are not required. Round all calculations to the nearest dollar where necessary and show all your workings. [3 marks] 10 Show what would be reported in the Statement of Financial Position for Shipbuilders Ltd for the year ended 30 June 2016 in regards to the lease, after recording the entries in d) above, [6 marks] 'The Present Value tables are shown at the end of this paper on page 9, [Total for Question 3 = 17 marks]