QUESTION 2 25 Marks Brilliant Coaches Ltd (Brilliant) entered into a contract with Benz Ltd (Benz) tor the lease of two buses. The model and size of the buses are stated in the contract but Benz does not have substitution rights The date of commencement of the lease is 1 July 2018 and the duration of the lease is for five years. It is a non-cancellable lease Five-year lease payments of N$135 000 are to be made annually in arrears, the first being made on 30 June 2019. The lease agreement gives the lessee the option to purchase the buses at the end of the fifth year for N$10 000. Brilliant intends to take up this option The interest rate implicit in the agreement is 12%. The following present value table is provided Present value factor (PVIFA) Annuity in arrears of N$1 for 5 years discounted at 12% 3.60482 Annuity in arrears of N$1 for 5 years, discounted at 12% 3.0375 Annuity in arrears of N$1 for 5 years, discounted at 12% 2.4018 Annuity in arrears of N$1 for 5 years, discounted at 12% 1.6901 Present value of N$1 IN 5 years, discounted at 12% 0.5674 The fair value of the buses at the inception of the lease is N$492 322 The estimated useful life of the buses is 8 years with an estimate residual value of N57 000 The buses are to be depreciated on a straight-line base. Assume a normal tax rate of 32% Comparative figures are not required and round your answer to the nearest whole number. Marks REQUIRED: 2.1 Prepare the journal entries to account for the lease in the accounting records of Brilliant Ltd for the year ending 30 June 2019 10 5 2.2 Prepare an extract of the statement of financial position of Brilliant Ltd at 30 June 2020 show the disclosure on the Non-current assets, non-current liabilities and current liabilities 23 Disclose the following in the Notes to the financial statements of Brilliant Ltd for the year ended 30 June 2020: Right of use asset Maturity of lease payments Finance costs Total cash flows relating to the lease 10 TOTAL MARKS 25