QUESTION 1 A company entered into a non-cancellable lease on January 20X10 (commencement date) to lease office furniture (low value assets). The lease term is five years. The lease payment is R400 per month for the first 2 years and R300 per month thereafter. The contract is a lease per IFRS 16. The financial reporting date of the company is 31 December The lessee has the option to renew the lease for a further 3 years on expiry of the first lease term and the instalment per month would amount to R10. At the commencement of the lease, it was reasonably certain that the option for a renewal would be exercised by the lessee. The benefit of the office equipment to the lessee remains unchanged throughout the lease term. The lessee elected to apply the recognition exemption per IFRS 16.5 in respect of low value assets to this lease contract. REQUIRED: a) Prepare the general journal entries (cash transactions included) for the above transactions for the entire lease term in the accounting records of the lessee, in accordance with International Financial Reporting Standards. Note: - Round calculated amounts to the nearest R1. - Journal narrations are not required. - Journals must be dated. b) Disclose the relevant information with regards to this lease agreement in the "Lease contracts in which the company is a lessee" note to the financial statements of the lessee for the year ended 31 December 20X10, in accordance with International Financial Reporting Standards. Note: - Round calculated amounts to the nearest R1. - Ignore taxation implications. - Comparative amounts are not required