XYZ Inc. gave on lease a crane to Alexander Contractors under a 4-year non- cancellable agreement which started from 1 January 2022. Annual payment for the same was $ 35,000 first payment from 1 January 2022. XYZ took responsibility of bearing insurance, maintenance and taxes on this crane. Estimated life of asset is 10 years and cost of $ 250,000. Expected fair value of asset at the end of lease term of 4 years is $ 55,000. There was no purchase or bargain or renewal option in the agreement. Both the companies closed their books of accounts every year at 31st December.What will be the treatment of these entries in the Income Statement and Financial Statements of both the parties at the end of 2022 in the light of IFRS 16.
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