QUESTION $1$ Horizon Ltd leased a machine to Zenith Ltd on $1$ July $2023.$ The machine was bought by Horizon Ltd on the same day $(1$ July $2023).$ The lease term is $3$ years. Zenith Ltd is required to make an annual payment, payable in arrears, on $30$ June each year of $$250000.$ Included in this annual payment are executory costs of $$20000$ for insurance and maintenance. Zenith Ltd incurs initial direct costs of $$15000$ at the start of the lease. The estimated economic life of the machine is $4$ years after which the residual value is expected to be zero. The estimated residual value of the machine at the end of lease term is S$150000.$ There is no residual value guaranteed by Zenith Ltd$.$ The interest rate implicit in the lease is $6\%.$