On 1 July 2019, ABC Ltd leased a machine to DEF Ltd with the following terms: . lease term is 3 years estimated economic life of the leased asset is 4 years annual payment of $23,000, first payment due on 30 June 2020 residual value at the end of the lease term is not guaranteed by the lessee interest rate implicit in the lease is 7% the lease is classified as finance lease from lessor's perspective the lease asset is to be returned to lessor at the end of lease term The journal entry recorded by the lessee for the year ended 30 June 2020 is: Lease liability 1610 Interest expense 21 390 Cr Cash 23 000 Dr Dr Dr Dr Cr Interest expense Lease liability Cash 4 225 18 775 23 000 Dr Dr Cr Interest expense Lease liability Cash 1610 21 390 23 000 O Dr Dr Cr Lease liability Interest expense Cash 4225 18 775 23 000 O