Question $3$

Alpine Ltd signed a non$-$cancellable lease with Mt Buller Ltd for a Cargo Plane $($single $-$ engine$)$ on $1^($st $)$ July $2024.$

The lease terms states, Alpine returns the plane to Mt Buller Ltd at the end of the lease. The following information is available:

Lease term $=20$ years

No residual payment required $=$ Scrapped

Fair value of Cargo Plane $($single $-$engine$)$ at the start of the lease $=$ $$2,428,400$

Lease payment $($on the inception of the lease $-1$st July $2024)=$ $$300,000$

Lease payment $($on $30$th June each year$-$ starting first paymnet on $30$th June $2025)=$ $$250,000$

Required:

a$)$ Determine the interest rate implicit in the lease.

b$)$ Provide, including the narration, the journal entries as at $1^($st $)$ July $2024$ in the books of Alpine Ltd and Mt

Buller Ltd$.$

c$)$ Provide, including the narration, the journal entries for the final year of the lease $($in $20$ years$)$ in the books of Alpine Ltd and Mt Buller Ltd$.$