Schwann Plc Enters into a Non-Cancellable 5-Year Lease for Office

Schwann Plc enters into a non-cancellable 5-year lease for office space in Bigtown's central business district.The building has an expected remaining life of 40 years.Schwann Plc has been offered a free fit-out of the office as an incentive to take up the lease.The fit-out would have cost Schwann Ltd €90 000 to do itself.The benefits of the fit-out are to be recognised on a straight-line basis.The rental payments are €110 000 per annum.How would the signing of the lease and the first rental payment be recorded by Schwann Plc?

A) $\begin{array}{|c|l|r|l|}\hline\text { On signing the lease: }\\\hline\\\hline \mathrm{Dr} & \text { Fixtures and fittings } & 90000 & \\\hline \mathrm{Dr} & \text { Deferred lease payments } & 460000 & \\\hline \mathrm{Cr} & \text { Lease payable } & & 550000 \\\hline\\\hline\text { First rental payment: }\\\hline \mathrm{Dr} & \text { Lease payable } & 18000 & \\\hline \mathrm{Dr} & \text { Lease rental expense } & 92000 & \\\hline \mathrm{Cr} & \text { Deferred lease payments } & & 110000 \\\hline\end{array}$
B) $\text { On signing the lease: }$
$\begin{array}{|l|l|l|l|}\hline \mathrm{Dr} & \text { Fixtures and fittings } & 90000 & \\\hline \mathrm{Cr} & \text { Lease incentive liability } & & 90000 \\\hline\end{array}$

$\text { First rental payment: }$
$\begin{array}{|l|l|l|l|}\hline \mathrm{Dr} & \text { Lease rental expense } & 110000 & \\\hline \mathrm{Cr} & \text { Cash } & & 110000\\\hline\end{array}$
C) $$\begin{array}{l}\begin{array} { | c | l | c | c | } \hline\text { On signing the lease: }\\\hline \text { Dr } & \text { Fixtures and fittings } & 90000 & \\\hline \mathrm { Cr } & \text { Lease incentive liability } & & 90000 \\\hline\\\hline { \text { First rental payment: } } & & \\\hline \mathrm { Dr } & \text { Lease incentive liability } & 18000 & \\\hline \mathrm { Dr } & \text { Lease rental expense } & 92000 & \\\hline \mathrm { Cr } & \text { Cash } && 110000\\\hline\end{array}\end{array}$$
D) $$\begin{array}{l}\begin{array} { | c | l | c | c | } \hline\text { On signing the lease: }\\\hline \text { Dr } & \text { Building } & 640000 & \\\hline \mathrm { Cr } & \text { Lease liability } & & 640000 \\\hline\\\hline { \text { First rental payment: } } & & \\\hline \mathrm { Dr } & \text { Interest expense } & 18000 & \\\hline \mathrm { Dr } & \text { Lease liability } & 92000 & \\\hline \mathrm { Cr } & \text { Cash } & &110000 \\\hline\end{array}\end{array}$$