On August 1, 2016, Alco Dynamics (AD) leased 250 vehicles to Blo-Jet Company (BC) under the following terms (both AD and BC are IFRS compliant):

A nonrenewable lease contract with annual lease payments beginning at the inception of the lease, August 1, 2016.

Fair value of each vehicle on August 1, 2016: $20,000

Cost of each vehicle to AD: $20,000

Estimated useful life of each vehicle in years: 7 years

Lease term: 5 years

Guaranteed Residual Value per vehicle at end of lease term $2,000

Interest rate implicit in the lease (known to lessee): 8%

The credit risk is normal and the nonreimbursable costs related to the lease can be reasonably estimated by AD.

On August 1, 2021, BC returned the fleet of vehicles described above to AD. An independent appraiser valued the vehicles at $2,500 each.

On September 1, 2021, AD leased 50 new vehicles at a total retail value of $590,000 (disclosed to the lessee) under the following terms to Durango Corporation (DC), a private entity which follows ASPE:

A nonrenewable lease contract with ownership reverting to the lessor

Annual lease payments beginning on September 1, 2021: $122,878

Estimated useful life of each vehicle in years: 7 years

Lease term: 5 years

Unguaranteed Residual Value per vehicle at end of lease term $2,500

Interest rate implicit in the lease (known to lessee): 10%

Required:

1. Prepare the lease transaction journal entries for AD on:

1. December 31, 2016 (AD's year end date)

2. August 1, 2021

2. Prepare all the lease transaction journal entries for DC in 2016 assuming its fiscal year ends on November 30, 2021 and it uses straight-line depreciation for all fixed assets.