L BAAB2033 - Financial Accounting & Reporting 2 Topic 5: MFRS16 Leases Example 1 Think High Enterprise (THE), which makes up its accounts to 31 December each year. THE signed a lease contract with a less or, FDH. The lease contract gives THE, the right to control the asset. The date of the contract is 1/1/x2. The following are some of the terms: THE is to pay RM40,000 immediately, with three further yearly installments of RM40,000 each, beginning on 1/1/x3. The agreed fair value of the asset is RM139,474 & the interest rate implicit in the lease is 10%. At the end of the lease period the title to the asset is transferred to the lessee. The expected economic life of the asset is five years & the residual value of the asset at the end of that time is zero. You are required to record the above in the books of the lessee for the years ended 31 December x2, x3, x4 and x5.

L BAAB2033 - Financial Accounting & Reporting 2 Topic 5: MFRS16 Leases Example 1 Think High Enterprise (THE), which makes up its accounts to 31 December each year. THE signed a lease contract with a less or, FDH. The lease contract gives THE, the right to control the asset. The date of the contract is 1/1/x2. The following are some of the terms: THE is to pay RM40,000 immediately, with three further yearly installments of RM40,000 each, beginning on 1/1/x3. The agreed fair value of the asset is RM139,474 & the interest rate implicit in the lease is 10%. At the end of the lease period the title to the asset is transferred to the lessee. The expected economic life of the asset is five years & the residual value of the asset at the end of that time is zero. You are required to record the above in the books of the lessee for the years ended 31 December x2, x3, x4 and x5.

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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