The legal title to thethree vehicleswill be transferred to Carentals at the end of the lease term. Please show the explanation and the workings clearly. Thank you

QUESTION 4. a) What is a "right-of-use asset"? Explain how a right-of-use asset and a lease liability are measured at the commencement of a lease 5 marks) b) On 1 January 2020, Carental Lid enters into a three-year lease of five SUVs for use in their rental business. Carental is required to make lease payments of $30,000 on 1 January 2020 and three further lease payments of f25,000 each on 31 December 2020, 2021, and 2022. The company incurred initial direct expenses of f2500. The legal title to the three vehicles will be transferred to Carentals at the end of the lease term. The legal title to the FIVE vehicles will be transferred to Carentals at the end of the Required lease term. NOT THREE AS THE QUESTION STATES. Show with calculations how this lease should be accounted for in the financial statements of Carentals for each of the three years to 31 December 2022 assuming the rate of interest implicit in the lease is 10% per annum. (15 marks) c) Outline the circumstances in which a lessee is not required to recognise a right-of-use asset and a lease liability at the commencement of a lease. (5 Marks) (Total 25 Marks) Present Value of $1 in the Future at Discount Rate r% Year 3% 4% 5% 6% 7% 8% 9% 10% 11% 0.9709 0.9615 0.9524 0.9434 0.9346 J.9259 0.9174 0.9091 0.9009 2 0.9426 0.9246 0.9070 0.8900 0.8734 0.8573 0.8417 0.8264 0.8116 3 0.9151 0.8890 0.863 0.8396 0.8163 0.7938 0.7722 0.7513 0.7312 4 0.8885 0.8548 0.8227 0.792 0.7629 0.7350 0,7084 0.6830 0.6587 5 0.862 0.8219 0.7835 0.7473 0.7130 1.6806 0.6499 0.6209 0.5935 6 0.8375 0.7903 0.7462 0.7050 0.6663 0.6302 1.5963 0.5645 0.5346 0.8131 0.7599 0.7107 0.665 0.6227 0.5835 0.5470 0.5132 0.4817 0.7894 0.730 0.6768 0.6274 0.582 0.5403 0.5019 0.4665 0.4339 0.7664 0.7026 0.6446 0.5919 0.5439 0.5002 0.4604 0.4241 0.3909 10 0.7441 0.6756 0.6139 0,5584 0.5083 0.4632 0.4224 0.3855 0.3522