Burt Ltd enters into a non—cancellable 6-years lease agreement with Earnie Ltd on 1 luly 2023. The lease is for an item of machinery that, at the inception of the lease, has a fair value of $1,589,567. The machinery is expected to have an economic life of 9 years, after which time it will have an expected residual value of $200,000. There is a bargain purchase option that Burt Ltd will be able to exercise at the end of the 6th year for $230,000. There are to be 6 annual payments of $400,000, the ?rst being made on 30 lune 2024. Included within the $400,000 lease payments is an amount of $30,000 representing payment to the lessor for the insurance and maintenance of the equipment The equipment is to be depreciated on a straight-line basis. a] Determine the rate of interest implicit in the lease and calculate the present value of the lease payments. b] Prepare the journal entries in the books of Burt Ltd at the start of the agreement and for the years ending 30 lune 2024 and 30 lune 2025. c] Prepare the portion of the statement of ?nancial position for the year ending 30 June 2024 and 2025 relating to the lease asset and lease liability.

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