question 4

Question 4 (10 marks) HAP Limited is a manufacturer of trucks. On 1 January 2020 it leases a truck to a lessee under a ve-year non-cancellable lease agreement. The following data is relevant: 1. Six equal annual payments that are due on 1 January each year (with the first payment on 1 January 2020) provide HAP Limited with an 4% return on investment. 2. On 1 January 2020, the fair value of the truck is $600,000, and the cost to HAP Limited is $530,000. 3. HAP Limited classifies the lease as a sales-type finance lease. Required (Answers round to the nearest dollar): a. Calculate the annual lease payment that HAP Limited would charge. (2 marks) b. Prepare the journal entries for HAP Limited on 1 January 2020. (6 marks) c. Calculate the interest income for HAP Limited in the year of 2020. (2 marks)