Question $1$ On the $\backslash (1^\{\backslash$text $\{$st $\}\}\backslash )$ September, $2020$ Jack Co entered into an agreement to lease a machine that had an estimated life of four years. The lease period is also four years, at which point the asset will be returned to the leasing company. Annual rentals of $\backslash (\backslash$$ $50,000\backslash )$ are payable in arrears from $\backslash (31^\{\backslash$text $\{$st $\}\}\backslash )$ August $2021.$ The machine is expected to have a nil residual value at the end of its life. The machine had a fair value of $\backslash (\backslash$$ $120,000\backslash )$ at the inception of the lease. The lessor includes a finance cost of $\backslash (20\backslash \%\backslash )$ per annum when calculating annual rentals. Required: How should the lease be accounted for in the financial statements of Jack for the year end $31$ August $2021?$