Question 3 On 1 July 2019 Downing Ltd agreed to lease equipment from Tipton Ltd, the manufacturer, for a period of three years. The equipment has a useful life of four years. The carrying amount of the equipment in the books of Tipton Ltd is $52,000. Downing Ltd has agreed to make annual payments of $30,000 commencing on 1 July 2019. The annual rental payments include $4,000 to reimburse the lessor for maintenance work. The estimated residual value at the end of lease term is $10,000. The lessee, Downing Ltd, has guaranteed $7,000 out of the $10,000 total estimated residual value at the end of the lease term. The interest rate implicit in the lease is 5% per annum, which is equivalent to the market rate of interest. Tipton Ltd adjusts its accounts on an annual basis every 30 June, the end of its financial year. Required: (a) Calculate the Net Investment in the Lease from the perspective of the lessor Tipton Ltd. (b) Prepare the lease schedule for the lessor Tipton Ltd, assuming that the lease is classified as a finance lease. (c) Prepare the journal entries in the books of the lessor Tipton Ltd in relation to this lease from 1 July 2019 to 1 July 2020 inclusive. (3+5+ 9 = 17 marks)