Compass Sdn Bhd enter into a lease agreement of machine F2030 with red tech Sdn Bhd on 1 Jan 2020. In the agreement redtech Sdn Bhd is expected to pay deposit of RM 100000 on the day if contract. The next payment will be RM 95000, RM 98000, RM 100000 and RM 105000 which will commence on 1 Jan 2021. The fair value of the machine on the inception date was RM 460000. The economic life of the machine was 6 years . Machine H2019 was also leased from another company known as SCF ENTERPRISE. Compass Sdn Bhd will pay SCF ENTERPRISE 5 installments of RM 12000 each. The machine useful life is 15 years .

i) explain the appropriate accounting treatment for each of the machine above for lessor. 

ii) prepare journal entries for both machines from the perspective of lessor for year 2020 and 2021

Answer rating: 100% (QA)

i Accounting Treatment for Lessor For each of the leased machines Compass Sdn Bhd the lessor should ... View the full answer