QUESTION 13 Lessee co. and Lessor Itd. Both follow IFRS. Jan 1, 2020, they enter into a lease agreement that the lessee agreed to lease equipment for 7 years and to assume all costs and risks of ownership. The lease effective Jan 1, 2020, and requires annual rental payments each January, starting Jan 1, 2020. Lessee's incremental borrowing rate is 7%, and the implicit interest rate used by lessor Itd is 7% and known to the lessee. The equipment was purchased by the lessor on this day Jan 1, 2020, for $1,095,047 paid cash by the lessor. Equipment useful life is 10 years and the estimated residual value is $32,500 guaranteed if returned. Lessee and Lessor depreciate similar equipment using the straight-line method. At the end of the lease, there is a bargain purchase option amount of $25,000. Collectability of lease payments is assured, also there is assurance that the lessee will exercise the bargain purchase option and keep the equipment at the end of the lease term. Lessee and Lessor year-end is Dec 31, of every year. Instructions: Assuming this is a Finance (capital), (Right for use asset) type lease for the Lessor and Lessee: (Round all your calculation to nearest $) 1. Calculate the minimum lease payment (MLP) that will be charged by the lessor. 2. Prepare the Lessor Journal entries as of Jan 1, 2020 (show your calculation) 2. Prepare the Lessee Journal entries as of Jan 1, 2020 (show your calculation) 3. Prepare the journal entries for the lessee as of Dec 31, 2020