Beta Group Limited (BGL), a company listed on the Singapore Exchange (SGX) has a diversified portfolio of businesses. There were the following issues relating to its financial statements for the year ended 30 June 203 : (1) On 1 July 20x2, BGL's Manufacturinq Division entered into a contract with a finance company to sell a building at Jurong. The carrying value of the building of $19m was sold for $22.5m. The building was leased back from the finance company to be one of its operating offices for a period of 40 years, which was equal to the building's remaining useful life. BGL may use the property as it so wishes during the lease term and must ensure proper upkeeping and maintenance. The lease rentals for the lease period are $1.1m payable annually in arrears and the interest rate implicit in the lease is 3.8% per annum. The present value of the lease payments approximates to the fair value of the building. The land element of the lease is ignored as it is considered not material. (2) The Delish Deli (DD) line of business now has 12 retail outlets across the island. On 1 July 20x2, DD entered into an arrangement with Fresh Delivery (FD) for the latter to provide a home delivery service on behalf of DD. The arrangement will last for three years. DD would pay an initial sum of $4,000 as arrangement fee, an annual fee of $50,000 in arrears, and an additional amount of $2 per additional delivery if the number of deliveries is made in a year exceeds 15,000 . FD has purchased two new delivery trucks to be used exclusively for DD's deliveries. These trucks have been specifically reconfiqured into refriqerated vehicles to suit DD's requirements and painted with DD's corporate colours and logo. FD will provide qualified drivers and delivery personnel, and they will wear DD's uniform. Further, the drivers will follow route plans as devised by DD, however the contract specifies that the trucks may not be taken out of Singapore. FD made 15,623 deliveries in the year ended 30 June 203. BGL Group companies' incremental borrowing rate is 4%. After years of rapid expansion, BGL realised that it is burdened with expensive long-term property costs. The company has a portfolio of leased and owned buildings. BGL is considering to close one of the loss-making store in a building and lease that building out with immediate effect. The building costs $600,000, has no residual value and is four years into a 20 year useful life. The company adopts the cost model and is depreciating its owned buildings on a straight-line basis. The following options are being considered: (i) Lease the building for a two year period to Crystal Properties Limited (CPL) for $150,000 per annum. (ii) Lease the building to CPL for 16 years for $60,000 per year. CPL would be entitled to cancel the lease arrangement for a fee of $2,000,000. BGL would retain legal title to the building for the duration of the lease in both cases (i) and (ii). As at 30 September 204, the building has a fair value of $540,000. (a) Apply FRS 116 Leases and explain the accounting treatment applicable to the sale of the building at Jurong. Compute and prepare the required journal entries in the year ended 30 June 203. (b) Explain how the arrangement between DD and FD is to be accounted in books of DD and provide relevant journal entries. (Note: PV annuity factors for 4%:1 year 0.96154;2 years 1.88609;3 years 2.77509;4 years 3.62990) (c) Advise how BGL should account for the transaction with CPL for each of the options proposed, quantifying amounts to be recognised in the financial statements as the information allows