UNS 1, 2 AND3 QUESTION 1 (20 marks) Hard Rock Ltd as a lessee signed a lease agreement for 5 years, beginning December 2012 Annual Rental payments of $40,000 are to be made at the beginning of each lease year (31 ember). The taxes, insurance and maintenance cost are the obligation of the lessee. The interest rate used by the lessor in setting up the schedule is 9%. Hard Rock Ltd's incremental borrowing rate is 10%, and cannot determine the rate being used by the lessor At the end of the lease, Hard Rock Ltd has the option to buy the equipment for S1; the fair value at that time would be $20,000. The equipment has an estimated useful life of 7 years, with no residual value. Hard Rock Ltd uses the straight line method of depreciation on similar owned equipment. Required: Indicate the type of lease Hard Rock Ltd has entered into Prepare the journal entries that should be recorded at 31 December 2012 by Hard Rock Ltd (Round all amounts to the nearest dollar) (3 marks) (a) (b) (5 marks) (c) Prepare the amortisation schedule for Hard Rock Lid for all 5 years Round all (8 marks amounts to the nearest dollar) Prepare the journal entries that should be recorded at 31 December 2012 by Hard Rock (4 marks) (d) Ltd