On January $1,2023,$ Fields Inc. enters into a $5-$year non$-$cancellable lease with Wilson

Ltd$.$ for equipment that has an estimated useful life of $5$ years and a fair value of

$$2,000,000.$ Fields has an incremental borrowing rate of $8\%$ and Wilson$$s implicit rate is

$6\%.$ Fields uses the straight$-$line depreciation method to depreciate assets. Fields will

make annual lease payments on January $1$ of each year $($with the first payment due at

the beginning of the lease$)$ based on the fair value of the equipment. The lease

agreement includes a guarantee that Fields will take over ownership of the equipment

from Wilson for a final payment of $$100,000.$ Both companies adhere to IFRS.

Instructions

a$)$ Calculate the lease payment Wilson Ltd$.$ will charge Fields Inc assuming that

there is no mark up on the fair value of the equipment. Round to the nearest

dollar.

b$)$ Calculate the present value of the minimum lease payments. Round to the

nearest dollar.

c$)$ Present the journal entries that Fields Inc. would record during the first year

of the equipment lease. Round to the nearest dollar.

d$)$ Prepare the journal entries that Wilson Ltd$.$ would record in the first year

assuming that this is a finance lease. Round to the nearest dollar.