$($a$)$

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Using any of the following methods: $(1)$ factor tables, $(2)$ a financial calculator, or $(3)$ Excel functions, determine the amount of the

liability for lease payments at the signing of the lease. $($Round factor values to $5$ decimal places, e$.$g$.1\mathrm{.}25124$ and final

answer to $0$ decimal places, e$.$g$.5,275.)$

Lease payments liability $

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Sheridan Mining Corporation, a public company whose stock trades on the Toronto Stock Exchange, uses IFRS. The vice$-$president of

finance has asked you, the assistant controller, to prepare the company's current accounting of a lease. The lease was signed by

Sheridan on April $1,2023,$ with Bertrand Ltd$.$ for a piece of excavation equipment. The following information relates to the agreement.

The term of the non$-$cancellable lease is three years, with a renewal option of one additional year at the annual rate of $130\%$

of the initial payment. The equipment has an estimated economic life of $10$ years.

The asset's fair value at April $1,2023,$ is approximately $$1\mathrm{.}0$ million.

The asset will revert to Bertrand at the end of the initial term of the lease, or at the end of the renewal period if Sheridan

exercises that option. The excavation equipment is expected to have a fair value of $$640,000$ on March $31,2026,$ and

$$540,000$ on March $31,2027,$ which is not guaranteed.

Sheridan assumes direct responsibility for all executory costs for the excavation equipment.

The initial term of the lease agreement requires equal annual rental payments of $$130,000$ to Bertrand, beginning on April $1,$

The lessee's incremental borrowing rate is $12\%.$ Bertrand's implicit rate is $11\%$ and is known to Sheridan.

Sheridan has a calendar year end.

Sheridan's operations manager says that there is a $75\%$ chance that the renewal period will be exercised.

Click here to view the factor table PRESENT VALUE OF $1.$

Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE.