On $1$ Jan$20$X$3$ Lis entered into a lease agreement to rent an asset for a $6-$ year period, at which point

it will be returned to the lessor and scrapped with annual payments of $ $18,420$ made in advance.

The initial measurement of lease liability should be discounted at the implicit rate of $12\mathrm{.}5\%$ shown in

the lease agreement.

Lis expects to sell goods produced by the asset during the first $5$ years of the lease, but has leased

the asset for $6$ years as this is the requirement of the lessor. Liz has the right to determine the use of

the asset during the lease term and obtain substantially all the economic benefits from its use.

Explain how the lease will be accounted $($current and non current liabilities$)$ for the year ending $31$

Dec $20$X$3,20$X$4$ and $20$X$5$ including extracts from the SOPF and SOFP.