c. LTK BHD entered into an agreement to lease a forklift from HEAVY MACHINERY BHD on 1 January 2020. The lease is for six-year which requires LTK to make annual payments of RM25,000, payable in advance on 1 January 2020 and subsequently on 31 December each year. At the end of the lease, the forklift will be returned to HEAVY MACHINERY BHD. The cost of machine is RM200,000 with the expected residual value of RM20,000 and useful life of 10 years. i. Assuming the implicit rate is 8 percent, show the journal entry on 1 January 2020 for LTK BHD. ii. Show all the journal entries on 31 December 2020 related to the lease for LTK BHD.

c. LTK BHD entered into an agreement to lease a forklift from HEAVY MACHINERY BHD on 1 January 2020. The lease is for six-year which requires LTK to make annual payments of RM25,000, payable in advance on 1 January 2020 and subsequently on 31 December each year. At the end of the lease, the forklift will be returned to HEAVY MACHINERY BHD. The cost of machine is RM200,000 with the expected residual value of RM20,000 and useful life of 10 years. i. Assuming the implicit rate is 8 percent, show the journal entry on 1 January 2020 for LTK BHD. ii. Show all the journal entries on 31 December 2020 related to the lease for LTK BHD.

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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