Hati Sdn Bhd enters into a finance lease with Lessor Sdn Bhd on 1 January 20x6...

 

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Hati Sdn Bhd enters into a finance lease with Lessor Sdn Bhd on 1 January 20x6 for an item of machinery. The terms are as follows: a. b. Lease rental of RM50,000 per year for five years (primary lease period), payable in advance an the first rental is due on 1 January 20x6; and The useful life of machine is 5 years with zero residual value. There is no initial direct cost incurred. The machine could be bought outright cash of RM200,000. Hati Sdn Bhd adopts a straight line depreciation policy for machinery. Its financial years ends on 31 December. i. Lease rental after five years (secondary lease period) is minimal and extends indefinitely. Required: Show the journal entry in Hati Sdn Bhd's accounts to record the lease transaction at its commencement; Calculate the depreciation required on the leased asset; and ii. iii. Record the lease liability and the allocation of the finance charge in each period. Hati Sdn Bhd enters into a finance lease with Lessor Sdn Bhd on 1 January 20x6 for an item of machinery. The terms are as follows: a. b. Lease rental of RM50,000 per year for five years (primary lease period), payable in advance an the first rental is due on 1 January 20x6; and The useful life of machine is 5 years with zero residual value. There is no initial direct cost incurred. The machine could be bought outright cash of RM200,000. Hati Sdn Bhd adopts a straight line depreciation policy for machinery. Its financial years ends on 31 December. i. Lease rental after five years (secondary lease period) is minimal and extends indefinitely. Required: Show the journal entry in Hati Sdn Bhd's accounts to record the lease transaction at its commencement; Calculate the depreciation required on the leased asset; and ii. iii. Record the lease liability and the allocation of the finance charge in each period.

Answer rating: 100% (QA)

i Entry to record the lease transaction at its commecement Date Accounts Debit RM Credit RM 1Jan06 R... View the full answer