Melvic Ltd. has signed a contract to lease a store from Glen Caper Ltd. nearby for a non-cancellable period of three years. The arrangement also provides an optionforMelvicLtd.torenewthelease forafurthertwoyearsatthesameannualpaymentrate. MelvicLtd.willmakeexpensive modificationstothebuildingatcommencementoftheleaseand thesemodificationsareexpected tohaveausefuleconomiclifeof7years.Thetermsofthelease relating to the building are as follows:- Dateofenteringlease 1 July2020 Durationoflease 3 years (plus option for further 2 years at the same rate) Leasepayments Initial payment of $40,000 plus half yearly payments of $60,000 payable at 31 December and 30 June Implicit interestrate 12% Cost of initial modifications paid in cash at commencement of lease $96,000 Economic Lifeof modifications 7 years with zero scrap value Required: For this lease:

a) Discussand determineifthe contractbetween MelvicLtdandGlen CaperLtd. contains a lease. For the remaining sections of this question, assume that the contract contains a lease according to AASB16 Leases.

b) calculate the lease liability and lease asset for Melvic Ltd.;

c) prepare a full lease schedule for Melvic Ltd., showing the division of the lease rental into interest and principal components;and

d) providethejournalentriesfortheleasetransactionsinthebooksofMelvicLtd.forthefinancial year ending 30 June 2021 (include journal entries at the inception 1/7/2020). Also include all relevant transactionspertainingto the modificationsforthe year ending30 June 2021.