You are a financial accountant working at Knappa Foods Limited $($Knappa$).$ Knappa is a manufacturer and retailer of food products. It has two manufacturing facilities in Australia $–$ one in Gosford, New South Wales, and one in Ballarat, Victoria.

You are currently working on several tasks relating to preparing Knappa$’$s financial statements for the year ended $30$ June $2024.$You have identified the following issues for consideration $($see photo attached$).$

$($a$)$ For the year ended $30$ June $2024,$ prepare the journal entries to account for items $1-2.$ Show all workings. Ignore the impact of tax.

$($b$)$ In relation to Item $2,$ assume that the terms of the lease agreement impose an annual additional lease payment on Knappa based on $2\%$ of Knapp's sales revenue earned from the shop. At the commencemen of the lease, Knappa's budget forecast for the shop's sale revenue is as follows:

Year ending Budgeted sales revenue

$30$ June $2025$  $$1,000,000$

$30$ June $2026$  $$1,150,000$

$30$ June $2027$  $$1,240,000$

$30$ June $2028$  $$1,700,000$

$30$ June $2029$  $$1,900,000$

Explain how the additional lease payments would be accounted for and the impact, if any, on the measurement of the lease liability at initial recognition. Refer to appropriate IFRS & IAS accounting standards.