QUESTION 2 LEASES: LESSOR ACCOUNTING (30 Marks) In the minutes to the Annual General Meeting held for the year ended 20X0 the Board members of Million Dollar Limited have complained about the high liquidity ratio that the company was experiencing. The financial director after analysing the financial statements realised that the liquidity ratio was high as a result of a huge bank balance. In trying to reduce the liquidity ratio the Financial Director purchased a boat on 1 January 20X1 at a cost of R210 000 in order to lease the bout to Fish the Shark Limited. Lease instalments of R90 000 were to be received annually in arrear for the 3 years of the lease term. Fish the shark Limited have guaranteed a residual value of R8000 payable on 31 December 20X3. The estimated value at that date was R10 000. The interest rate implicit in the agreement was 15, 5819%. Ignore tax Required 1.1 Calculate the gross investment in the lease, the net investment in the lease and the (10) amount of the finance income. Prepare the journal entries in the accounting records of Million Dollar Limited for the (20) year ended 30 December 20X1. 1.2 8