Taylor Ltd entered into a lease arrangement with Swift Ltd on 1 July 2019 for four years. A lease payment of $85,000 are made on 30 June every year, with first payment to be made on 30 June 2020. The implicit interest rate in the lease is 8%. Swift Ltd determined that this contract is non-renewable and contains a lease component. The leased equipment is expected to have an economic life of seven years, after which time it will have an expected salvage value of $15,000. The reporting date for both Taylor Ltd and Swift Ltd is 30 June. Below was the journal entry recorded on the book of Swift Ltd on 1 July 2019:

Dr Right-of-use Asset $348,500

Cr Lease Liability $348,500

• What is the interest expense that Swift Ltd should record for the financial year ended on 30 June 2020?

• What is the depreciation expense that Swift Ltd should record for the financial year ended on 30 June 2020?