On 1 January 20X1, T Bhd entered into a lease agreement to lease a machinery from Q Bhd (of which RM4,000 deposits was immediately paid) for a four year period. The machinery had a fair value of RM16,680 (straight-line depreciation should be used) at 1 January 20X1 and the lease agreement requires four further annual payments of RM4,000 each starting on 31 December 20X1. The interest rate implicit in the lease is to be taken as 10% per annum. The expected useful life of the machinery is five years, at the end of which the residual value is estimated to be nil. At the end of the lease period the title to the asset is transferred to the lessee. Required: Prepare extracts of the statement of profit or lossof T Bhd (lessee) for the years ended 31 December 20X1, 20X2, 20X3 and 20X4 and the statement of financial position as at that date in accordance with IFRS 16.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On 1 January 20X1, T Bhd entered into a lease agreement to lease a machinery from Q Bhd (of which RM4,000 deposits was immediately paid) for a four year period. The machinery had a fair value of RM16,680 (straight-line depreciation should be used) at 1 January 20X1 and the lease agreement requires four further annual payments of RM4,000 each starting on 31 December 20X1. The interest rate implicit in the lease is to be taken as 10% per annum. The expected useful life of the machinery is five years, at the end of which the residual value is estimated to be nil. At the end of the lease period the title to the asset is transferred to the lessee. Required: Prepare extracts of the statement of profit or lossof T Bhd (lessee) for the years ended 31 December 20X1, 20X2, 20X3 and 20X4 and the statement of financial position as at that date in accordance with IFRS 16.
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