B. Klasik Bhd leased a packaging machine for three (3) years to a newly established company, AB Bhd in 2018. The lease agreement requires lessee to pay in advance RM34,000 in 2018, RM38,000 in 2019 and RM40,000 in 2020. The useful life of the asset is 8 years. The fair value of the machine is RM180,000. Klasik Bhd classified the lease as an operating lease. At the end of each financial year, Klasik Bhd recognized the amount paid by the lessee as rent revenue. REQUIRED: Analyze the appropriateness of the accounting treatment applied by Klasik Bhd in accordance with MFRS 16 Leases. Extract from Present Value Table: (5 Marks) Periods Present value of 1 (n) Present value of an ordinary annuity of 1 Present value of an annuity due of 1 9% 10% 9% 10% 9% 10% 4 0.70843 0.68301 3.23972 3.16986 3.53130 3.48685 5 0.64993 0.62092 3.88965 3.79079 4.23972 4.16986 6 0.59627 0.56447 4.48592 4.35526 4.88965 4.79079 7 0.54703 0.51316 5.03295 4.86842 5.48592 5.35526 8 0.50187 0.46651 5.53482 5.33493 6.03295 5.86842