On 1 January 2019, BBC Berhad entered into a contract with Lessor Berhad to lease a heavy machine for a period of 5 years in view of the anticipated business expansion in the near future. The lease agreement is non-cancellable by both parties. Based on the terms and conditions of the contract, the heavy machine will be transferred to BBC Berhad at RM113,72 and this is the fair value of the asset. The transfer of the lease asset was also on 1 January 2019. Lease rental payment of RM30,000 is made at the end of each year. The first lease rental payment was made on 31 December 2019. There is no purchase option at the end of the lease term and the lease asset will be returned to Lessor Berhad. The lease asset has an estimated economic life of 8 years and the implicit rate of interest in the lease is 10%. There is no residual value of the lease asset at the end of the economic life. To accommodate the installation of the lease asset, BBC Berhad incurred RM40,000 in renovating and redesigning of the interior of the building. It is BBC Berhad’s policy to capitalise such cost and depreciate it over a period of 8 years using the straight -line method. There is no scrap value at the end of the useful life. Required: In connection with the above lease transaction, prepare the relevant extracts for following statements of BBC Berhad for the year ended 31 December 2019:

(i) The statement of profit and loss. 

(ii) The statement of financial position. 

Note: You are required to show all the workings

Answer rating: 100% (QA)

Part i Statement of Profit Loss Expenses Finace costs 11372 Depreciation expense 27745 Total Expense... View the full answer