**Leases-Cemara Lessor-Cermai Bhd** **Question 6** Cemara Bhd sells and leases out a plant. On 1 January 2019, Cemara Bhd entered into a three-year non-cancellable lease with Cermai Bhd on the following terms: i. Lease rental is RM28,000, payable annually in advance. ii. The initial direct costs of RM4,200 incurred in commission and legal fees are to be borne by Cemara Bhd and charged to the Statement of Profit or Loss on a systematic basis. iii. The interest rate implicit in the lease with Cermai Bhd is 18%. iv. There is a guaranteed residual value of RM14,000 by Cermai Bhd. v. The fair value of the machine is RM80,358. **Required:** a) Prepare the related journal entries for the year 2019 for Cemara Bhd. b) Prepare the extract of Cemara Bhd’s Statement of Profit and Loss and Other Comprehensive Income for the year ended 31 December 2019, 2020, and 2021. c) Prepare the extract of Cemara Bhd’s Statement of Financial Position as at 31 December 2019, 2020, and 2021. (Include the notes to the financial statement in relation to the lease).

Leases-Cemara Lessor-Cermai Bhd Question 6 Cemara Bhd sells and leases out a plant. On 1 January 2019, Cemara Bhd entered into a three-year non-cancellable lease with Cermai Bhd on the following terms: i. Lease rental is RM28,000, payable annually in advance. ii. The initial direct costs of RM4,200 incurred in commission and legal fees are to be borne by Cemara Bhd and charged to the Statement of Profit or Loss on a systematic basis. iii. The interest rate implicit in the lease with Cermai Bhd is 18%. iv. There is a guaranteed residual value of RM14,000 by Cermai Bhd. v. The fair value of the machine is RM80,358. Required: a) Prepare the related journal entries for the year 2019 for Cemara Bhd. b) Prepare the extract of Cemara Bhd’s Statement of Profit and Loss and Other Comprehensive Income for the year ended 31 December 2019, 2020, and 2021. c) Prepare the extract of Cemara Bhd’s Statement of Financial Position as at 31 December 2019, 2020, and 2021. (Include the notes to the financial statement in relation to the lease).

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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