O WORDS POWERED BY TINY QUESTION 4 25 points Save Answer On 1 July 2020, Immunotech Ltd (lessee) agrees to lease a machine from Chemnotool Ltd (lessor) that will be used to produce an innovative new drug for cancer treatment. The lease agreement is for three years. During this time, Immunotech will have exclusive use of the machine and plan to increase the company's production revenue by 20% year-on-year. If the machine is out of order due to a repairs and maintenance issue, Chemotool will be required to temporarily replace the machine with a similar one until the leased machine has been repaired. A payment of $30,000 is agreed to be paid on 1 July 2020 with subsequent annual payments of $30,000 also due on 1 July of each year. The equipment is expected to have a residual value of $4,000 at the end of the lease term. However, Immunotech Ltd agrees to pay Chemotool Ltd only $1.500 at the end of the lease regardless of the equipment's final value. The machine, which was purchased by Chemotool on 1 July 2020 at a market price $85,071, is expected to have a useful life of four years. Unfortunately, at the end of the four years the machine will be worthless and Chemotool is expected to dispose of the machine at a cost of $500. The rate of interest implicit in the lease is 10% and the end of the reporting period is 30 june. At the end of the lease term, Immunotech returned the equipment to the lessor and the returned equipment was sold for $1,000. Required: 1. Explain why the agreement between Immunotech Ltd and Chemotool Ltd creates a Lease with an identified asset in accordance with Australian Accounting Standards (use references to AASB to support your answer). (5 marks) 2. Prepare general journal entries as at 1 July 2020 to record the lease in the books of both Immunotech Ltd and Chemotool Ltd. Show your workings. (20 marks) For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). B I S Paragraph Arial - % T a 14px V ABC T T + 99 TT xX2 B. SEX fel Save All Answers Close Window Save and Submit Click Save and Submit to save and submit. Click Save All Answers to save all answers. O WORDS POWERED BY TINY QUESTION 4 25 points Save Answer On 1 July 2020, Immunotech Ltd (lessee) agrees to lease a machine from Chemnotool Ltd (lessor) that will be used to produce an innovative new drug for cancer treatment. The lease agreement is for three years. During this time, Immunotech will have exclusive use of the machine and plan to increase the company's production revenue by 20% year-on-year. If the machine is out of order due to a repairs and maintenance issue, Chemotool will be required to temporarily replace the machine with a similar one until the leased machine has been repaired. A payment of $30,000 is agreed to be paid on 1 July 2020 with subsequent annual payments of $30,000 also due on 1 July of each year. The equipment is expected to have a residual value of $4,000 at the end of the lease term. However, Immunotech Ltd agrees to pay Chemotool Ltd only $1.500 at the end of the lease regardless of the equipment's final value. The machine, which was purchased by Chemotool on 1 July 2020 at a market price $85,071, is expected to have a useful life of four years. Unfortunately, at the end of the four years the machine will be worthless and Chemotool is expected to dispose of the machine at a cost of $500. The rate of interest implicit in the lease is 10% and the end of the reporting period is 30 june. At the end of the lease term, Immunotech returned the equipment to the lessor and the returned equipment was sold for $1,000. Required: 1. Explain why the agreement between Immunotech Ltd and Chemotool Ltd creates a Lease with an identified asset in accordance with Australian Accounting Standards (use references to AASB to support your answer). (5 marks) 2. Prepare general journal entries as at 1 July 2020 to record the lease in the books of both Immunotech Ltd and Chemotool Ltd. Show your workings. (20 marks) For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). B I S Paragraph Arial - % T a 14px V ABC T T + 99 TT xX2 B. SEX fel Save All Answers Close Window Save and Submit Click Save and Submit to save and submit. Click Save All Answers to save all answers