Prepare extracts of YIC Bhd financial statements

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Question - YIC Bhd. (YIC) entered into a four-year non-cancellable lease agreement on 1 February 2021 to lease a tractor. Lease payments are RM100,000 per year payable in advance, with the first lease payment made on 1 February 2021. The interest rate implicit in the lease is 5%. There is no option to buy the tractor at the end of the lease term. The useful life of the leased tractor is 7 years. Initial direct costs of RM30,000 were incurred by YIC to obtain the lease.

Required - In accordance with IFRS 16 / MFRS 16 Leases:

(a) Calculate the lease liability for the above lease on 1 February 2021.

(b) Calculate the initial measurement of the right-of-use asset.

(c) Calculate the outstanding balance at the end of each financial year (the movement of lease liability) using the actuarial method for the above four-year lease term ending 31 January 2022 to 31 January 2025.

(d) Prepare extracts of YIC Bhd.'s financial statements for the years ending 31 January 2022 and 31 January 2023 in respect of the above lease.

Reference no: EM133143077

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