On 1 July 2019, Delight Ltd (lessee) entered into a lease agreement with Joy Ltd (lessor), agreeing to lease a truck from Joy Ltd for three years. Details of the lease are as follows: Fair value of truck at inception of lease Residual value at end of lease term Residual value guaranteed by lessee Annual payments (1st payment due on 30 June 2020) Interest rate implicit in the lease $232,973 $50,000 $40,000 $81,000 8% The annual lease payments of $81,000 include reimbursement of insurance and maintenance costs of $6,000. The lease is cancellable, but cancellation will incur a monetary penalty equivalent to 2 years lease payments. The estimated useful life of the truck is five years, and it has an estimated residual value of $20,000 at the end of that time. Delight Ltd intends to return the truck to Joy Ltd at the end of the lease term. The truck is to be depreciated using the straight-line method.

Required: (i) Calculate the present value of the lease payments.

(ii) Discuss if the lease should be classified as a finance lease or operating lease from the perspective of Joy Ltd. Justify your answer.

(iii) Prepare a schedule of lease payments for Delight Ltd.

(iv) Prepare all relevant journal entries for Delight Ltd from 1 July 2019 to 30 June 2020. Narrations are not required.