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Question: on 1 july 2019 flyer ltd decides to lease an...

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On 1 July 2019 Flyer Ltd decides to lease an aeroplane from Finance Ltd. The term of the lease is 20 years. The implicit interest rate in the lease is 10 per cent. It is expected that the aeroplane will be scrapped at the end of the lease term. The fair value of the aeroplane at the commencement of the lease is $2713808. The lease is non-cancellable, returns the aeroplane to Finance plc at the end of the lease and requires a lease payment of $330000 on inception of the lease (on 1 July 2019) and lease payments of $280000 on 30 June each year (starting 30 June 2020). There is no residual payment required.

Required: a) Provide the entries for the lease in the books of Flyer Ltd as at 1 July 2019.

b) Provide the entries for the lease in the books of Finance Ltd as at 1 July 2019.

c) Provide the journal entries in the books of Flyer Ltd for the final year of the lease (that is, the entry in 20 years’ time).

d) Provide the journal entries in the books of Finance plc for the final year of the lease (that is, the entry in 20 years’ time)

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