Orix Bhd. is a leasing company that enters into a 5-year lease (that does not allow cancellation) for equipment with KHAR Bhd. On 1 January 2020. The equipment has an estimated life of 6 years and fair value of RM1,800,000 at the commencement of the lease. In addition, the leased equipment is of a specialized nature such that only KHAR Bhd. Can use the equipment without major modifications being made. The lease contains the following provisions:

• Rental payments of RM200,000, payable at the beginning of each 6-month period, throughout the lease period.
• It is expected that Orix Bhd. Will realize RM100,000 from selling the asset at the expiration of the lease. However, the actual residual value is expected to be RM60,000. The residual value is not guaranteed by KHAR Bhd.

KHARs incremental borrowing rate is 8%. KHAR uses the straight-line method to depreciate its assets.

Assuming KHAR Bhd. Applies paragraphs 22-49 of MFRS 16:

1. 1. Prepare the related journal entries for the year 2020 in the books of KHAR Bhd. (include an amortization schedule through 1 January 2021 and round off to nearest Ringgit.)
2. 2. Prepare the Statement profit or loss and Other Comprehensive Income for KHAR Bhd. For the year ended 31 December 2020.
3. 3. Prepare the Statement of Financial Position for KHAR Bhd., as at 31^st December 2020.