Lessor Ltd, who leases out equipment, has requested your help because their accountant has gone on extended stress leave. The lease details, for an item of equipment purchased on 31 March 2019, are below:

commencement date	1 April 2019
upfront payment due on the commencement date	$30 000
lease term for equipment item	3 years
fixed payments per annum at year end	$100 000
purchase option price. The lessee is reasonably certain to exercise this option	$ 50 000
interest rate implicit in the lease	6%
economic life of equipment asset	5 years
depreciation method used by lessor	Straight line
The relevant present value discount factors are:
present value of $1 in n periods n = 3 i = 6%	0.8396
present value of an annuity n =3 i = 6%	2.6730

Required:

Assume the lease was classified as a finance lease:

(i) Prepare the journal entry, on the commencement date, to initially recognise the finance lease receivable. Show your workings.

(ii) Complete the table in the answer booklet

(iii) Determine the carrying amount of the leased equipment as at 31 March 2023; this date is after the lease term has finished. Explain your answer.

(iv) Prepare financial statements, over the lease period, to reflect the effects of the lease. Lessor Ltd classifies interest income as cash from investing activities.

Assume the lease was classified as an operating lease:

(i) Prepare the necessary journal entries over the period of the lease period. Treat the purchase option price amount as an extra final payment, i.e., an operating lease would not have a purchase option. Show your workings.

(ii) Prepare financial statements, over the lease period, to reflect the effects of the lease.

Note: You determined the cost of the PPE-Equipment item in the finance lease receivable recognition journal entry above.