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On 1 January 2021, ABC is planning to supply company vehicles for its senior managers and is comparing 3 choices: Choice A The vehicles can

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On 1 January 2021, ABC is planning to supply company vehicles for its senior managers and is comparing 3 choices: Choice A The vehicles can be bought for RM?5,2?4 with a 101196 loan. The vehicles would be bought on 1 January 21121 and held for 4 years. The estimated disposal value is RM29,?53. Monthly maintenance costs would be RM235 per month. The loan would be repayable in 4 yearly instalments starting 1 January 21122. Assume that an average yearly percentage rate on a loan is 5%. Choice B The vehicles can be leased with a 12months contract on 1 January 221 with no buy option. The cost would be Rl'vfll per month in advance including the maintenance charge. Choice C A final choice is the vehicles can he leased for a period of 4 years commencing on 1 January 21121. The vehicles have a total market value of RM?5,2?4 on this date. The lease requires payment of RM1,4D3 monthly for the period of lease duration of which RM235 is a maintenance charge. ABC likes to show the maintenance charge as a separate line item in the profit or loss account. At the end of the 4th year, there is no choice to renew the lease or buy the vehicle, and there is a disposal value guarantee. The interest to be charged for the year ended 31 December 21121 is estimated at RM2,2?4 based on the implicit interest rate in the lease. The net present value of the lease payments for four years is RMSGBUB excluding the maintenance charge. Additional information: The profit before tax and before accounting for any of the 3 choices for vehicles is likely to be RMlD, for the year ended 31 December 21121. ABC depreciates vehicles over a 4year period using the straightline method. You are required to: propose how to account for the above transactions in ABC's financial statement for the year ended 31 December 2D21. Submission format: Lessor? Lessee? Any exemption? 1. Brief relevant discussion on Key definition, Recognition, Measurement 8: Disclosuret'Preseutation of [PBS 16. 2. Propose how ABC can account for the above transactions in accordance with the above IFRS

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