Question 3 Joplin Ltd entered into a lease agreement on 1 July 2012 with Thomas Ltd. The terms of the lease are as follows: Duration of lease 10 years Useful life of leased asset 13 years $2.000 Unguaranteed residual $1.000 at inception Lease payment $2,500 per year (10 payments) Lease payments (in arrears) due 30 June The interest rate implicit in the lease is 6% and the fair value of the leased asset at the inception of the lease is $20 517. The lease is non-cancellable and at the end of the lease the asset is retumed to the lessor. The economic benefits provided by the lease asset are expected to be consumed evenly over its life. What is the value of the lease asset and lease liability in the books of the lessee after adjusting entries made on 30 June 2013? A. lease asset: $17 908; lease liability: $18064 B. lease asset: $21 352;lease liability: $21954 C. lease asset: $18 465; lease liability: $18 188 D. lease asset: $17 460; lease liability: $17004 Question 4 Mitchum Ltd entered into a lease agreement on 1 July 2013 to lease equipment on the following terms: Duration of lease 4 years Useful life of leased asset 8 years Guaranteed residual $1,500 Lease payments (in arrears) $3,500 per year (4 payments) due 30 June The interest rate implicit in the lease is 6% and the fair value of the leased asset is $13 316. The lease is cancellable at the option of the lessee. The economic benefits provided by the leased asset are expected to be consumed evenly over its life. What are the appropriate entries in the books of the lessee at the end of the reporting period 30 June 2014? Dr Dr Interest expense Lease liability Cash 799 2701 3500 1332 Dr Cr Lease amortisation expense Accumulated amortisation 1332 B Dr Dr Cr Interest expense Lease liability Cash 728 2772 3500 Dr Cr Lease amortisation expense Accumulated amortisation 1213 1213 Dr Cr Rental expense-equipment Cash 3500 D 3500 Dr Cr Rental expense--equipment Cash 3500 3500