Rose Ltd enters into a lease of office equipment for five years. The total value of the equipment

when new is $5000. The lease payments are payable on 30 June each year. The first lease

payment of $1 500 is payable at commencement of the lease on 30 June 2019. The remaining

lease payments are $1 400 in years 2 and 3 and $1 500 in years 4 and 5. In addition to the

payments, the lessor provides a lease incentive with a value of $600 at the commencement of

the lease. The benefits to the lessee under the lease are expected to arise on a straight-line

basis over the term of the lease.

(a) How should Rose Ltd account for this lease transaction?

(b) Prepare the general journal entries in the books of Rose Ltd on 30 June 2019 in accordance with the provisions of AASB 16 'Leases'