Anyone that can help with this need it within 2hours please

2. (a) (b) The financial accountant of Houston Ltd, a company with a 30 June year end, has

contacted you with regard to acquiring some machinery on 2 July 2019.

The company initially considered purchasing the machinery at a cost of 80,000 and raising the necessary funding by making a fresh issue of 32,000 ordinary 1 shares at a premium of 1.50p each.

However, Houston Ltd finally decided not to purchase the machinery outright and entered into an eight-year finance lease for the machinery. The lease has an implicit interest rate of 8% per annum.

Houston Ltd paid a deposit of 4,000 on 2 July 2019, and the lease rentals are 12,250 per annum, payable annually in advance on 2 July each year, starting on 2 July 2019.

The plant is expected to have a ten-year useful economic life.

Required: (i) Prepare extracts from Houston Ltds financial statements for the year

Identify the accounting concept that underlies the recommended treatment of accounting for finance leases in IAS 17 Leases, and explain the rationale

behind the treatment adopted by the IAS.

(4 marks)

ended 30 June 2020 showing the effect of the lease.

(11 marks)

(ii) If Houston Ltd had purchased the machinery instead of leasing, state the double entry journal that would have been required to account for

the share issue.

(3 marks)