1. JC Corporation (JCC), a company that follows IFRS, signed a lease for equipment on January 31, 2021 and the following information is known:

• The term of the lease is five years with annual payments being made at the start of each lease year in the amount of $61,500.
• Costs incurred related to insurance and repairs and maintenance are JCCs responsibility.
• The interest rate used by the lessor in setting the payments is 9%, JCCs incremental borrowing rate is 10%. JCC is unaware of the rate being used by the lessor.
• JCC has the option to buy the equipment for $6,000 at the end of the lease which is much lower than the expected fair value at that time.
• The equipment has an estimated useful life of seven years with no residual value.
• JCC uses straight-line depreciation for similar equipment.

Required (14 marks):

1. Calculate the present value of the lease obligation and record the journal entry recorded by JCC upon the signing of the lease contract on January 31, 2021.
2. Prepare a lease amortization schedule.
3. Prepare any adjusting journal entries required on December 31, 2021.