Innovative Sdn Bhd agrees to lease an equipment to Creative Sdn Bhd on 1 January 2019. The following information relates to the lease agreement. The term of the lease is 5 years and the machinery has an estimated economic life of 7 years. The cost of the machinery is RM1,500,000, and the fair value of the asset on 1 January 2019 is RM1,750,000. No bargain purchase or renewal options are included in the contract, and it is not a specialized asset. At the end of the lease term, the asset reverts to the lessor and has a guaranteed residual value of RM100,000. Creative estimates that the expected residual value at the end of the lease term will be RM150,000. Creative amortizes all of its leased equipment on a straight-line basis. The lease agreement requires equal annual rental payments of RM340,000, beginning on 1 January 2019. The collectability of the lease payment is probable. Innovative desires a 5% rate of return on its investments. Creatives incremental borrowing rate is 6%, and the lessors implicit rate is unknown to Creative. Required: a. Identify the type of lease to the lessor and give reasons for your classification. (2 marks) b. Compute the value of the lease liability to the lessee at commencement of the lease. (2 marks) c. Prepare a schedule to compute for the lessee, present value of the equipment and its related obligation throughout the lease term. (6 marks) d. Based on your answers in (iii) above, prepare journal entries for lessee for 2019, 2020 and at the end of the lease term to record the lease agreement, the lease payments and all the expenses related to this lease. (4 marks) e. Prepare extracts of statement of profit and loss and statement of financial position for financial year 2021. (3 marks) f. Suppose Creative expects the residual value at the end of the lease term to be RM80,000 but still guaranteed a residual value of RM100,000. Compute the value of the lease liability at lease commencement. (3 marks)