On 1 January 2020, BBC enters a contract with Gramhar Bhd, for a 2-year rental of...
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On 1 January 2020, BBC enters a contract with Gramhar Bhd, for a 2-year rental of 3 printers, a cutting system, and a copy machine. The machines will be returned to Gramhar Bhd at the end of the 2 years contract. The economic life of all the machines is 5 years. BBC will pay monthly payments of RM5,000 for the following services: RM/Per month 4,700 200 Rental of all machines Maintenance of all machines Reimburse Grammary Bhd's administration costs associated with the contract 100 Based on reviews of market information, BBC could have bought one printer for RM60,000, a cutting system for RM40,000 and a copy machine for RM45,000 if they were purchased on cash basis. A third-party company provides similar maintenance services for RM30 per machine per month. Second transaction: BBC and Ground A non-cancellable agreement was entered between BBC and Ground Bhd for 6 years, commencing on 1 January 2020 for a rental of plant and machinery located in Alor Setar, Kedah. Ground Bhd has several heavy plant and machinery for rental, and they typically rent them on the operating lease basis and no finance lease is given. The fair value of the plant and machinery rented by BBC was RM1,000,000, and they are expected to have an economic life of 10 years. BBC plans to use the plant and machinery for only 6 years. The annual rental of the plant and machinery is RM170,000 per annum, payable in arrears as of 31 December each year. The cost paid to the agent who manage the arrangement, which consist of a commission of RM50,000, was borne by Ground Bhd. QUESTION: Would the reporting by BBC Bhd differs from those reported by Gramhar Bhd and Ground Bhd, and why (why not)? On 1 January 2020, BBC enters a contract with Gramhar Bhd, for a 2-year rental of 3 printers, a cutting system, and a copy machine. The machines will be returned to Gramhar Bhd at the end of the 2 years contract. The economic life of all the machines is 5 years. BBC will pay monthly payments of RM5,000 for the following services: RM/Per month 4,700 200 Rental of all machines Maintenance of all machines Reimburse Grammary Bhd's administration costs associated with the contract 100 Based on reviews of market information, BBC could have bought one printer for RM60,000, a cutting system for RM40,000 and a copy machine for RM45,000 if they were purchased on cash basis. A third-party company provides similar maintenance services for RM30 per machine per month. Second transaction: BBC and Ground A non-cancellable agreement was entered between BBC and Ground Bhd for 6 years, commencing on 1 January 2020 for a rental of plant and machinery located in Alor Setar, Kedah. Ground Bhd has several heavy plant and machinery for rental, and they typically rent them on the operating lease basis and no finance lease is given. The fair value of the plant and machinery rented by BBC was RM1,000,000, and they are expected to have an economic life of 10 years. BBC plans to use the plant and machinery for only 6 years. The annual rental of the plant and machinery is RM170,000 per annum, payable in arrears as of 31 December each year. The cost paid to the agent who manage the arrangement, which consist of a commission of RM50,000, was borne by Ground Bhd. QUESTION: Would the reporting by BBC Bhd differs from those reported by Gramhar Bhd and Ground Bhd, and why (why not)?
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Related Book For
Intermediate Accounting Reporting and Analysis
ISBN: 978-1285453828
2nd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
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