Win Box Ltd acquired an item of equipment and enters into a non-cancellable lease agreement with Melbourne Equipment Ltd on 1 January 2015. The lease consists of the following:

• Date of inception:                                1/1/15
• Duration of lease:                                4 years
• Life of leased asset:                              5 years
• Lease payments (annual):                     $180,000 (annual) which includes $20,000 for                                      

                                                                   Maintenance and insurance costs per annum.                                                                           

• Guaranteed residual value

(Added to final payment):                     $50,000

• Interest rate:                                          12%

Required:

1. Determine the present value of minimum lease rental payment. 
2. Prepare the journal entries for ABC (the Lessee) using the Net Method for the following               

Transfer of control

1. Payment of annual payments for 2015 and 2016.