Reference no: EM132955541
Question - On 1 January 2020, Syarikat Lessee Bhd entered into a lease agreement with Syarikat Lessor Global Bhd which allows the company to use one unit of MRI2 scanner for a period of 5 years. At that date, the fair value of the equipment was RM400,000. The scanner is expected to be usable for a period of 6 years. Additional information on the lease agreement is as follows.
1. The annual lease payment is RM97,329 excluding maintenance expenses of RM5,000 per annum paid on each 31 December.
2. Syarikat Lessee Bhd reserves the right to determine the use of the scanner.
3. The scanner must be returned to Syarikat Lessor Global Bhd at the end of the lease period. The expected residual value is empty. Syarikat Lessee Bhd guarantees that the scanner has a minimum value of RM50,000 upon return.
4. The loan interest rate of Syarikat Lessee Bhd is 12%. The expected return by Syarikat Lessor Global Bhd is 10% and this rate is known by Syarikat Lessee Bhd.
5. Both companies use the straight line method to depreciate their respective assets.
Required -
a) Based on the requirements of MFRS 16 Leases, determine the type of lease for lessor and lessor. Explain your justification.
b) Prepare a lease amortization schedule until the end of the lease period for Syarikat Lessee Bhd (If necessary).
c) Prepare journal entries in the books of Syarikat Lessee Bhd throughout the year 2020.
d) Prepare the lease amortization schedule until the end of the lease period for Syarikat Lessor Global Bhd (If necessary).
e) Prepare journal entries in the books of Syarikat Lessor Global Bhd throughout the year 2020.
f) Prepare an excerpt of the Comprehensive Income Statement and Statement of Financial Position of Syarikat Lessee Bhd for the year ended 31 December 2020 in respect of the above lease.
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