O ILL. 6. O R. Ltd. (the lessee) acquired machinery on lease from S Ltd. (the lessor) on January 1, 2013. The lease term covers the entire economic life of the machinery, i.e. 3 years. The fair value of the machinery on January 1, 2013 is 3,50,000. The lease agreement requires the lessee to pay an amount of 1,50,000 per year beginning December 31, 2013. The lessee has guaranteed a residual value 11,400 on December 31, 2015 to the lessor. The lessor, however, estimates that the machinery will have a lsalvage value of only 10,000 on December 31, 2015. The implicit rate of interest is 15%p.a. Compute the value of machinery to be recognised by the lessee and also the finance charges every year on the basis of AS-19. Present value factors at 15% for 3 years are : Ist year 0.8695 2nd year 0.7561 Third year 0.6575