(a) Calculate the finance charge. (2 marks)

(b) Allocate the finance charge over the 3 years lease term. (7 marks)

(c) Prepare the journal entries:

i. To recognize asset and liability upon inception of the lease. (2 marks)

ii. To record rental payment made on 2018. (2 marks)

iii. To record lease interest expense for 2019. (2 marks)

iv. To record depreciation charge for 2020. (2 marks)

(d) Prepare the extract Statement of Financial Position of Passiflorace Bhd as at 31 December 2018. (3 marks)
 

Transcribed Image Text:

Passiflorace Bhd just signed an agreement to lease an embroidery machine as below: Date of arrangement Lease term Fair Value of machine Lease rental payment per annum Lease term Useful life Estimated residual value Interest rate 1 January 2018 Actuarial Method, Payment in Arrears RM115,000 RM50,000 3 years 5 years RM30,000 6% Cancellation policy End of lease term Allowed with 5% penalty on lessee Machine will be return to lessor Passiflorace Bhd just signed an agreement to lease an embroidery machine as below: Date of arrangement Lease term Fair Value of machine Lease rental payment per annum Lease term Useful life Estimated residual value Interest rate 1 January 2018 Actuarial Method, Payment in Arrears RM115,000 RM50,000 3 years 5 years RM30,000 6% Cancellation policy End of lease term Allowed with 5% penalty on lessee Machine will be return to lessor

Answer rating: 100% (QA)

a Calculate the finance charge Finance charge Total lease rentals during the lease term Present Value of lease rentals The present value of lease rent... View the full answer