Wall finalised a lease arrangement with deliverrite on 1 July 2022 for a fleet of delivery vehicles across Australia.

The key terms of the lease are as follows:

Lease term - Five years, commencing 1 July 2022

Annual lease payments - Five annual payments of $125,000 pald on 30 June each year. The first payment was made on 30 June 2023.

Interest rate implicit in the lease - 8%

Lease Incentive- $20,000 paid by deliverrite to Wall on 1 July 2022

Additional Information

Wall incurred legal fees of $5,000 for negotiating the lease. Wall paid these fees on 1 July 2022.

The estimated useful life of the vehicles is 13 years.

Wall's incremental borrowing rate is 9%.

Calculate the value of the lease liability and right-of-use asset for Wall at initial recognition. Ignore the impact of tax.

Prepare the journal entries in relation to the lease arrangement for the year ended 30 June 2023. Ignore the journal entries at initial recognition and ignore the impact of tax.

Illustrate how Wall will present this lease arrangement in the statement of financial position as at 30 June 2023. Ignore the impact of tax.