(25 QUESTION 1 marks) IFRS 16 - Leases sets out guidance for accounting for contracts that are classified as leases. It can be stated that the application of certain IFRS 16 principles is an example of "substance over form". On 1 April 2019, Katutush Ltd. entered into a contract to acquire a specialised piece of equipment. The agreement provided for 4 annual payments ofN$15.5 million, commencing on 31 March 2020. In addition, payment of a deposit ofN$30 million was required on 1 April 2019. The agreement also provided that Katutush Ltd. could buy the residual asset outright at the end of the term for a nominal sum of money. At 1 April 2019, the fair value of the equipment wasN$80 million. The present value of the agreed deposit & lease payments is alsoN$80 million. At 1 April 2019, the effective finance cost implicit in the contract is 9.2%. The equipment has a useful economic life of 5 years. REQUIRED: Demonstrate, with appropriate calculations, the accounting journal entries required to record the transaction above for year ended 31 March 2020. Present relevant extracts from the Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 March 2020 and the Statement of Financial Position as at that date. (17 marks) (13 QUESTION 2 Marks) Purchase of machine A machine was purchased from an American supplier on credit at US $13 846,15. It was ordered on 1 September 2019 and arrived in Walvis Bay harbour on 15 October 2019. It was installed by a South African engineer at a cost of N$ 10 000 (excluding VAT) on 30 October 2019 and was ready for use on 1 November 2019, even though it was only taken into use on 8 November 2019. The creditor was paid on 31 May 2020. The following exchange rates applied at the given dates: 1 September 2019 US $1 = N$ 6,42 15 October 2019 US $1 = N$ 6,50 30 October 2019 US $1 = N$ 6,60 1 November 2019 US $1 = N$ 6,80 8 November 2019 US $1 = N$ 7,20 30 April 2020 US $1 = N$ 7,50 31 May 2020 US $1 = N$ 7,00 The machine is depreciated according to the standard policy of the company, i.e., straight line at 20% p.a. The reporting period ends on 30 April each year. REQUIRED: Prepare ALL the journals relating to the machine above (from its original purchase until the end of 2021 (30/4/2021)) to record the transactions. Journal descriptions are required. (13 marks)