On $1$ October $2022,$ Oak increased the operating capacity of its machinery. As a consequence of a shortage of liquid funds, Oak was unable to out rightly buy the required machinery which cost $$450,000.$ On the advice of the finance director, Oak entered into lease agreement with the machinery manufacturer. The lease required four annual payments in arrears of $$150,000$ starting at the $30$ September $2023.$ The machinery would have a useful life of four years and would be scrapped at the end of this period.

Required:

Prepare extracts of Oaks statement of profit of loss and statement of financial position for the year ended $30$ September $2023$ in respect of the lease agreement if the implicit interest rate is $10\%$ per annum.

Answer rating: 100% (QA)

To prepare extracts of Oaks statement of profit or loss and statement of financial position for the ... View the full answer