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Prepare lease amortization schedule during the lease term

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Reference no: EM132585021

On 1 January 2019 WanHai Bhd leased a Hitachi 950E Model Bulldozer until 1 January 2025 from Pratak Bhd. The useful life of the machine is estimated at 7 years. Annual lease payments amounting to RM244,095 starting 1 January 2020. On every 31 December, WanHai Bhd has to pay an annual maintenance cost of RM45,000 and annual insurance of RM21,000.

On 1 January 2025, the bulldozer will be returned to Pratak Bhd. On this date, WanHai Bhd also guarantees the value of the machine amounting to RM150,000.
Pratak Bhd's implicit rate is 9% while WanHai Bhd's loan rate is 11%. However, WanHai Bhd does not know the implicit rate of Pratak Bhd. WanHai Bhd closes its account every 31 December.

Be required:

Question 1: Prepare for WanHai Bhd,

a) Journal entry on 1 January 2019.

b) Lease amortization schedule during the lease term.

c) Journal entries throughout 2019 and 2020.

d) Lease-related presentation in the financial statements as at 31 December 2019.

Reference no: EM132585021

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