Week 8 - Question 3 (10 marks) FRM Ltd acquired an item of equipment and enters into a non-cancellable lease agreement with FEN Equipment Ltd on 1 January 2015. The lease consists of the following: Date of inception: 1/1/15 - Duration of lease: 4 years . Life of leased asset: 5 years Lease payments (annual): $550 000 (annual) which includes $80 000 for Maintenance and insurance costs per annum. . Guaranteed residual value (Added to final payment): . Interest rate: $190 000 7% Formula for PV of $1 in n periods =1/(1+k)" Formula for present value of annuity of $1 per period for n periods where, k is the discount rate expressed in decimal 1-1/(1+k)" k Required: a) Determine the present value of minimum lease rental payment. (5 Marks) b) Prepare the journal entries for FRM Ltd (the Lessee) using the Net Method for the following: (5 Marks) i. Transfer of control Payment of annual payments for 2015 and 2016