Johnson Ltd enters into a lease agreement with Peterson Ltd in late 2018 under the following conditions: Duration of lease: 10 years Life of leased asset: 12 years Bargain Purchase Option: $8,000 Lease payment: $6,500 at lease inception Annual lease payments in arrears): $7,000 per year (10 payments) The lease may be cancelled only with the permission of the lessor. If the rate of interest implicit in the lease is 10%, what is the fair value of the asset at the inception of the lease, and assuming that the company decides not to early adopt AASB 16, would the lease be a 'Finance' or 'Operating' lease under the former AASB 117? A $56 745, operating lease B $52 596, operating lease @ @ C $56 745, finance lease D $52 596, finance lease Question 18 1 Point Considering whether to use historical cost or fair value relates to which of the following components in accounting policy decisions? A Definition B Disclosure C Recognition D Measurement James Cook Ltd bought a piece of land 10 years ago and the market value of this property is now worth five times its purchase cost. The accountant suggested that James Cook Ltd should revalue the asset. This notion is consistent with the qualitative characteristic of: A relevance. B comparability. timeliness. understandability. Question 20 1 Point What is the essential factor in identifying whether an entity is a reporting entity? A Whether the entity is listed on the ASX or not. B Total revenue earned. Existence of users dependent on general purpose financial statements to make decisions. D Existence of users who are able to demand financial statements to meet their specific needs