On 1 July 2021, Fox Ltd leased equipment from Terrier Ltd with a useful life of 6 years. The equipment is held in the inventory of Terrier at a cost of $130,000. The details of the lease contract are as follows:

Amount	Details
5 years	Duration of lease
$40,000	5 annual payments starting on 30 June 2022
$10,000	Guaranteed residual value
	The lease is non-cancellable
10%	The interest rate implicit in the lease.
$160,000	Fair value of the equipment

Required:

Please fill in the blanks. Any present value calculations MUST be done using the present value Tables 1 and 2 from the Issues textbook. Round to nearest whole numbers.

Identify which of the following statements about the lease in the context of AASB 16 Leases is NOT CORRECT by entering the letter of the INCORRECT statement. ______________ (Type in your selected answer: A, B, C or D)

A. The present value of the lease payments amounts to substantially all of the fair value of the equipment.

B. Terrier Ltd would recognise a profit on the sale of the equipment equal to $7,837.

C. The income recognised by Terrier Ltd in relation to the lease includes sales revenue at the time the lease commences and finance income over the lease term.

D. Terrier Ltd would recognise this lease as a finance lease.

The present value of the lease payments is equal to $ _____________ (please fill in the blank)

What is the interest income recognised by Terrier Ltd on 30 June 2022? Please fill in the blank $ ______________________