Will upvote answer.

QUESTION 1 PART B Cheap Finance Ltd has requested your help in preparing their financial statements as they are unsure of the new requirements of NZ IFRS 16 Leases for lessors. You are provided with the following lease details: Lessor 1 April 2019 7 years Cheap Finance Ltd is the: Commencement date Lease term Lease classification Upfront payment due on the commencement date Fixed payments per annum received at year end Extra final payment at end of the lease Ownership transfers to the lessee at end of lease IDC incurred by the lessor The interest rate implicit in the lease FV of underlying asset at commencement date Economic life of the asset The depreciation method used by the lessor The relevant present value discount factors are: Present value of $1 in n periods n=7 Present value of an annuity i=8% Interest income SCF classification Finance Lease $40 000 $120 000 $40 000 Yes $0 8% ? 8 years Straight line 0.5835 5.2064 CFOA Required: (1) Prepare the journal entry for Cheap Finance Ltd at commencement date. Determine the fair value of the underlying asset. (11) Complete the lessor's table in the space provided. What is the total interest income for this lease? (111) Prepare financial statements for Cheap Finance Ltd to reflect the effects of the lease for the financial periods ending 31 March 2020, 2022, 2024, and 2026. (iv) Is an additional final journal entry required at the end of the lease by Cheap Finance Ltd to recognise the transfer of ownership to the lessee? Explain your answer. QUESTION 1 PART B (i) The journal entry to recognise finance lease receivable $ Dr $ Cr 1/4/2019 The fair value of the underlying asset would be: $ $ (ii) Complete the table below Table for the Lessor Lease Interest Income 8% Finance Lease Receipts Receivable Reduction Commencement of lease on 1 April 2019 Finance Lease Receivable Balance 31/3/2020 31/3/2021 31/3/2022 31/3/2023 31/3/2024 31/3/2025 31/3/2026 31/3/2026 (iii) Cheap Finance Ltd Financial Statements Statement of Financial Position as at: Current assets: 31 March 2020 31 March 2022 31 March 2024 31 March 2026 Non-current assets: 31 March 2020 31 March 2022 31 March 2024 31 March 2026 Statement of Comprehensive Income for the year ending: Por L section: OCI section: 31 March 2020 31 March 2022 31 March 2024 31 March 2026 Statement of Cash Flows for the year ending: CFOA: CFIA: CFFA: QUESTION 1 PART B continued: (iv) Is an additional journal entry required? Answer yes or no. Explanation for your