On January 1, 2021, Aylmer (follows IFRS) decided to lease a machine. The accountant at the time did not know how to record this asset. NO TRANSACTIONS relating to leases were recorded. The following information pertains to the leased machine:

The lease term is 6 years and the economic life of the asset is 7 years.

The annual payment is $22,740. This payment includes annual executory costs (insurance) of $890. The remainder is the lease payment.

Interest rate associated with this lease is 5.75%.

In the Excel spreadsheet, see the tab labelled Leased Liability to make the appropriate calculations and requirements for reconciling the lease information.

Present Value Calculation & Amortization Schedule
PV
Rate
Nper
Pymt
FV
Type

Required: Prepare all the appropriate entries (including setup up the asset, the liability and any payments and interest) for the year 2021