Kemuning Bhd is involved in retail business. Its financial statements will be authorised for issue on 31 March 2021. Given below is the trial balance as at 31 December 2020: DR(RMD CR(RM) RM000 RM000 Revenue 931,000 Cost of sales 572,200 Inventory at 31 Dec 2020 42,000 Administrative expenses 66,600 Rental income from investment property 4,000 Finance costs 20,000 Land at valuation - 1 Jan 2020 300,000 Building at valuation - 1 Jan 2020 56,000 Accumulated depreciation on Building at 1 Jan 2020 4,200 Plant at cost 144,000 Accumulated depreciation on Plart at 1 Jan 2020 67,200 Investment property-valuation 1 January 2020 48,000 Selling and distribution cost 60,000 Trade receivables 55,000 Bank 11,200 Trade payables 47,200 Ordinary share capital 104,800 Non-redeemable preference share capital 68,000 Other payables 40,000 Revaluation Reserve - 1 January 2020 30,200 Retained earnings - 1 January 2020 105,200 Development cost at 1 January 2020 (Note 8) 4,000 6% Bank loan 8,000 Franchise at cost on 1 January 2020 16,000 Accumulated amortisation on Franchise 1 Jan 2020 3,200 Interim ordinary dividend paid 8,000 Interim preference dividend paid 6,000 Tax paid 4,000 1,413,000 1,413,000 5. On 1 January 2020, Kemuning Bhd entered into a three (3) year agreement with MRHAK Bhd to use a plant in order to boost up its production. The present value of minimum lease payment was RM7,000,000. The contract had specified the plant to be used by Kemuning Bhd and Kemuning Bhd obtained substantially all of the future benefit from the use of the plant. Kemuning Bhd had the right to direct the use of the specified plant. The annual payment of RM2,500,000 was payable for three (3) years beginning 1 January 2018. However, MRHAK Bhd has put a condition to Kemuning Bhd that any renewal of subsequent rental periods will be at the same market rental. The company allocates finance charges based on sum-of-digits method. Other plants also have a remaining useful life of 5 years. 6. The company has ceased using one of the land costing RM60,000,000. The land was rented out on 1 January 2020 to another company. The fair value of the land on 1 January 2020 was RM60,000,000 and RM68,000,000 on 31 December 2020. V. Based on (5), (a) Explain whether the contact contained a lease. (1 mark) (b) Assuming that the contract contained a lease, prepare journal entries to account for the lease for the year ended 31 December 2020. (7 marks) Based on (6), (a) State the classification of the landon 1 January 2020. (1 mark) (b) Prepare journal entries to account for the change in fair value of the land on 31 December 2020. (2 marks) vi