Anumpa Ltd leased an item of Machinery from Imlie Ltd for a period of five years. The Machinery has a useful life of 12 years. There is no purchase option available at the end of the lease term. The monthly rental lease payment is $90,000 over the next five years. The following are additional details pertaining to the lease agreement: Rent in advance $2,000 Term in years 5 Interest rate implicit 6% Fair value of leased assets $5,500,000 PV of Lease Payments $4,500,000 Total lease payments ? Required: a) Calculate the total lease payments.
b) Classify the lease under IAS 17. Provide reasons (show calculations) to support your answer.