On 1 July 20X1 Lessee Ltd leased some equipment from Lessor Ltd. On the same day, the lessor acquired the equipment that was to be leased at fair value.

The details of the lease arrangement are as follows:

• The lease term was for 5 years

• The interest rate implicit in the arrangement was 5%

• The lessee paid an amount of $40,000 per annum to the lessor. The first payment was made on 30 June 20X2

• Included in the annual amount payable by the lessee to the lessor was an amount of $3,000 for maintenance and repairs

• The residual value at the end of the lease term was $19,000 of this, an amount of $12,000 was guaranteed by the lessee

• The lessee expects to pay $5,000 of the residual value guarantee to the lessor at the end of the lease term

• At the commencement of the lease, the lessee incurred initial direct costs of $1,350 and the lessor incurred initial direct costs of $1,670.

Required Write in the box below the amount that would be recognised as the lease liability by Lessee Ltd at the commencement of the lease in accordance with the requirements of AASB 16. Do not include any spaces or dollar signs when you write your answer below.