Shan enters into a five-year lease of a building which has a remaining useful life of ten

years. Lease payments are $150,000 per annum, payable at the beginning of each year. shan

incurs initial direct costs of $60,000 and receives lease incenlives of $15,000. There is no

transfer of the asset at the end of the lease and no purchase option. The interest rate implicit

in the lease is not immediately determinable but the lessee's incremental borrowing rate is 11

At the commencement date Bright pays the initial $150,000, incurs the direct costs and receive

the lease incentives.

()Calculate the lease liability and right of use asset, prepare the extracts of the financial

statements

(i)Assume that the payments were made in arrears ie at the end of the year, i) compute the

lease liability and right-of-use asset, prepare the extracts of the financial statements