Question $2$

On $1$ January $2021.$ Alpha Ltd$,$ a company that deals in heavy machinery, entered into a finance lease agreement with a customer for the sale of a machine. The terms of the finance lease are as follows:

Cost of machine purchased by Alpha Ltd: R$300000$

Cash price $($fair value$)$: R$480000$

Lease term: $4$ years

Annual lease payments: R$150000,$ payable at the end of each year.

Interest rate implicit in the lease: $12\%$

Initial direct costs incurred: R$20000$

Alpha Ltd recognizes finance leases using the gross method.

Required:

Prepare the journal entries for the recognition of the sale, finance lease receivable, and unearned finance income for Alpha Ltd on $1$ January $2021.$

Calculate the finance income and prepare the relevant journal entries for the first two years ended $31$ December $2021$ and $31$ December $2022,$ assuming payments are made as scheduled.

Explain the impact of this lease transaction on Alpha Ltd$\text{'}$s statement of financial position and statement of comprehensive income for the year ended $31$ December $2021$