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Marina Bhd owns a hotel property in Kuala Muda. The hotel is leased out to Bay Sea Hotel under a 20-year operating lease. In the
Marina Bhd owns a hotel property in Kuala Muda. The hotel is leased out to Bay Sea Hotel under a 20-year operating lease. In the lease agreement, Marina Bhd will receive yearly lease payment of RM 25m for 20 years plus 5% of room revenue from the operations of the hotel. Marina Bhd estimates that the cash flows from its 5% share of the room revenue to be about RM2m per year. Explain how Marina Bhd shall account for the hotel property. Select one: Oa. The hotel property is classified as leases. O b. The hotel property is classified as inventories. c. The hotel property is classified as property, plant and equipment. Od. The hotel property is classified as investment property. D
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