Prepare extracts from burge ltd financial statements

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The financial accountant of Burge Ltd, a company with a 30 April year end, has contacted you with regard to acquiring some machinery on 2 May 2020. The company initially considered purchasing the machinery at a cost of £240,000 and raising the necessary funding by making a fresh issue of 40,000 ordinary £1 shares at a premium of £5.00p each. However, Burge Ltd finally decided not to purchase the machinery outright and entered into an six-year finance lease for the machinery. The lease has an implicit interest rate of 6% per annum. Burge Ltd paid a deposit of £24,000 on 2 May 2020, and the lease rentals are £42,000 per annum, payable annually in advance on 2 may each year, starting on 2 May 2020. The plant is expected to have a ten-year useful economic life.

Required:

Problem (i) Prepare extracts from Burge Ltd's financial statements for the year ended 30 April 2021 showing the effect of the lease.

Reference no: EM132954487

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