Tutorial question – IFRS16 On 1 January 2021, ABC is planning supplying company vehicles for its senior managers and is

[answerhappygod]

Tutorial question – IFRS16
On 1 January 2021, ABC is planning supplying company vehiclesfor its senior managers and is comparing 3 choices:
Choice A
The vehicles can be bought for RM75,274 with a 100% loan. Thevehicles would be bought on 1 January 2021 and held for 4 years.The estimated disposal value is RM29,753. Monthly maintenance costswould be RM235 per month. The loan would be repayable in 4 yearlyinstalments starting 1 January 2022. Assume that an average yearlypercentage rate on a loan is 5%.
Choice B
The vehicles can be leased with a 12-months contract on 1January 2021 with no buy option. The cost would be RM1,900 permonth in advance including the maintenance charge.
Choice C
A final choice is the vehicles can be leased for a period of 4years commencing on 1 January 2021. The vehicles have a totalmarket value of RM75,274 on this date. The lease requires paymentof RM1,403 monthly for the period of lease duration of which RM235is a maintenance charge. ABC likes to show the maintenance chargeas a separate line item in the profit or loss account.
At the end of the 4th year, there is no choice to renew thelease or buy the vehicles, and there is disposal value guarantee.The interest to be charged for the year ended 31 December 2021 isestimated at RM2,274 based on the implicit interest rate in thelease. The net present value of the lease payments for four yearsis RM50,803 excluding the maintenance charge.Additionalinformation:The profit before tax and before accounting for any ofthe 3 choices for vehicles is likely to be RM100,000 for the yearended 31 December 2021. ABC depreciates vehicles over a 4 yearsperiod using straight line method.
You are required to: propose how to account for the abovetransactions in the ABC’s financial statement for the year ended 31December 2021.
Sir/Madam, I was confused about this tutorial question, may uguide me? Thank you very much ^^ so much
Submission format:Lessor? Lessee? Any exemption?
1. Brief relevant discussion on: Key definition, Recognition,Measurement & Disclosure/Presentation of IFRS16.
2. Propose how ABC can account for the above transactions inaccordance with the above IFRS.