• On 31^st December,2020 David Ltd. entered into a lease agreement with Aron Leasing for one Toyota Car.
• Total cost of the car was Rs.5,000,000. David deposited 10% amount as advance with the leasing company same day.
• Contract term was five years and David had the right to purchase the car at end of lease term for the deposited amount.
• Annual lease payment was Rs.1,200,000 payable at end of each year.
• On the same day, the Aron Leasing company issued cheque in favor of Toyota for the full cost of the car, and it was deposited with the Toyota Company.
• How will this transaction affect the balance sheet and income statement of David Ltd as on 31 December, 2020?
• As on 31 December, 2021? (Assume car has still not been received even after one year!!!)