I Required: a) Show the entries in the financial statements of Cantle for machine 1, for each of the three years of the lease. [11 marks] b) Show the entries in the financial statements for the year ended 31 December 2019 for machine 2, analysing your treatment of each cost. [8 marks] c) Analyse the impact on Cantle plc, of leasing as opposed to purchasing machine 1. [6 marks] Total 25 marks Question 3 Cantle plc manufactures candles and has a factory in Birmingham. It prepares financial statements to 31 December each year and during the year ended 31 December 2019, has leased one machine and purchased another. - Machine 1 . This is a packaging machine acquired under a 3-year lease on 1 January 2019. Cantle plc makes an initial payment of 25,000 on 1 January 2019 and then three annual payments of 38,000 commencing on 31 December 2019. There are initial direct costs of 1,000, incurred by Cantle plc, and the rate implicit in the lease is 10%. The following discount factors may be useful:- Year DF 10% 1e 0.9091 2 0.82642 39 0.7513 The machine has a useful life of three years and ownership transfers to Cantle at the end of the lease. - Machine 2 - Machine 2 produces scented candles. It was purchased on 1 July 2019 and the following information is available: Manufacturers list price Sellers invoiced price Cost of reinforcing the floor before installing the machine Insurance for the year to 30 June 2020 Inspection of the machine prior to use Delivery charge Machine operator wages for 6 months to 31 December 2019 500,000 450,000 2,000 630 4102 250 12,000 le The company will depreciate machine 2 over ten years on a straight-line basis. A full year's depreciation is charged in the year of acquisition