Question 4 (20 Marks) Part A (12 marks) ABC Limited is a Melbourne-based mining company and operate in a small scale. It has a year end of 30 June. ABC has negotiated to acquire the use of a transport truck under a lease agreement which commences on 1 July 20x7. The lease contains the following key terms Initial payment An initial payment of $100,000 to be paid on 1 July 20X7 Lease payments Two payments of $170,000 to be paid on 30 June 20X8 and 30 June 20x9 Transfer of Ownership of the transport track will transfer to ABC on 30 June 20x9 when ownership the final payment is made Interest rate The interest rate implicit in the case is 12% Additional information: ABC intends to use the transport truck after the lease term has finished. The truck's useful life to be eight years. The incremental borrowing rate is 14%. ABC incurred legal costs of $10,000 in setting up the lease. Income tax deductions can be claimed for lease payments and legal costs paid. Interest expense and depreciation calculated for accounting purposes do not give rise to a tax deduction. ABC has a tax rate of 30% Required: a) Calculate the lease liability amount as at 1 July 20x7. (2 marks) b) Prepare the lease payment schedule from 1 July 20X7 to 30 June 20X8. (4 marks) c) Prepare the journal entries in relation to the lease for the year ending 30 Jun 20X8. (6 marks) Part B (8 marks) In a newspaper article of 21 March 2019 entitled "Buru set for renewed oil search in northern WA' (by Matt Bimey in Business News) it was reported that the ASX-listed company known as Buru Energy was: a) embarking on a multimillion-dollar search for oil in the Canning hydrocarbon basin in northern Westem Australia. The company was preparing to drill up to four exploration wells to test some promising oil prospects in a relatively underexplored region. b) undertaking ongoing technical work on the Rafael prospect as part of the next potential exploration well. This technical work includes the reprocessing of existing seismic data over the structure and further quantification of the source, seal and reservoir parameters for the prospect Required: You are required to describe how to account for the expenditure referred to in parts (a) and (b) above