On 1 January 2023, Lessor plc leases a machine to a client. The lease term is three years and lease payments of £1,000 per month are required. The machine has a useful life of eight years and its fair value at 1 January 2023 is £50,000.
(a) Explain why this lease is an operating lease.
(b) Explain how the machine itself and the lease payments should be dealt with in the financial statements of Lessor plc, assuming that the company prepares accounts to 30 June each year.