Green $($GC$)$ a publicly accountable entity is looking to expand their delivery fleet. Management has identified a need for $20$ delivery vans at an estimated cost of $$1,000,000.$ To finance the acquisition of the vans, GC has negotiated a six$-$year lease with Brown Inc. commencing December $31,2019.$ Seeger has established an annual lease payment of $$181,032$ based on a rate of return in the lease of $6\%($provided to the lessee$)$ which is slightly higher than GC$\text{'}$s incremental borrowing rate of $5\%.$ The first payment is due upon signing the lease. The rate of return is based on GC guaranteeing a total residual value for the vans of $$80,000$ of which GC management believes is $$30,000$ more than the anticipated residual value for the delivery vans.

REQUIRED

Prepare the journal entry$($s$)$ for Brown Inc. for the inception of the lease and the first year of the lease. $(7\mathrm{.}5$ Marks$)$

Prepare the journal entry$($s$)$ for Green Corp. for the inception of the lease and the first year of the lease. $(6\mathrm{.}5$ Marks$)$

lii Describe the differences in the accounting for the lease from the perspective of the lessee if the entity had adopted ASPE.

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