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Zumba Ltd entered into an agreement to lease specialised equipment for a five-year period, commencing January 1, 2021. At that date, the equipment had a

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Zumba Ltd entered into an agreement to lease specialised equipment for a five-year period, commencing January 1, 2021. At that date, the equipment had a remaining useful life of only four years. Annual lease payments total $6.4 million, 12% of which relates to insurance costs. The entity incurred expenses to the tune of $672,000 to draft the lease, while it received lease incentives amounting to $212,000. The agreement speaks to a guaranteed residual value of $2,800.000. The interest rate implied in the lease is 9%, while the incremental borrowing rate is 4% higher. REQUIRED: Prepare the relevant journal entries in the last year of the lease. Prepare the statement of financial position extract in the first year of the lease. Zumba Ltd entered into an agreement to lease specialised equipment for a five-year period, commencing January 1, 2021. At that date, the equipment had a remaining useful life of only four years. Annual lease payments total $6.4 million, 12% of which relates to insurance costs. The entity incurred expenses to the tune of $672,000 to draft the lease, while it received lease incentives amounting to $212,000. The agreement speaks to a guaranteed residual value of $2,800.000. The interest rate implied in the lease is 9%, while the incremental borrowing rate is 4% higher. REQUIRED: Prepare the relevant journal entries in the last year of the lease. Prepare the statement of financial position extract in the first year of the lease

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