Wealth Ltd. has entered into lease agreement with a lessor for a period of 5 years at the annual lease rental of 8 lakhs. There is an option at the…

Wealth Ltd. has entered into lease agreement with a lessor for a period of 5 years at the annual lease rental of 8 lakhs. There is an option at the end of the said period that lease can be owned by lessee. Other factors to be noted are discount rate of 8% per annum and interest rate implicit in the lease of 10% per annum. Wealth Ltd. is reasonably certain to exercise the option to purchase the leased asset at the end of lease term and - 56,00,000 is the exercise price agreed in the lease term for purchasing of land at the end of the 5th year. Therefore, the same has been considered in computing the present value of the lease liability. At the end of the year 3, Wealth Ltd. exercised the option to purchase the land at value of 56 lakhs, whereas the market value on that date was 75 lakhs. For revised discount rate, consider the interest rate implicit in the lease. Required (ii) Provide the amounts reflecting in the balance sheet, profit and loss and statement of cash flows at the end of year 1.