Problem 2 On December 31, 20x0 an entity sells one of its asset to a leasing company and immediately leases it back. Fair value of asset $1,200,000 Asset's original cost $3,000,000 Accumulated depreciation 2,200,000 Lease term 15 years Economic (and useful) life of asset 15 years Residual value 0 Interest rate implicit in the lease (known to the lessee) 5% Lessee's incremental borrowing rate 5% At the end of the lease term, the asset's ownership reverts back to the lessee. The rst lease payment of $1 10,105 is due on December 31, 20x0. Required For each of the following, prepare the journal entries relative to this lease transaction at December 31, 20x0 and December 31, 20x1. (3) The lessee is subject to IFRS (b) The lessee is subject to ASPE