QUESTION $2$

Provide a journal of the lease expense for the period ended $31$ December $2022$

The lease commenced on $1$ May $2020$ and $31$ December is the year end.

The lease payment is R$1200$ per month for the first year and R$1450$ per month for the second year.

QUESTION $3$

State which properties are not classified as Investment Property.

QUESTION $4$

XYZ Ltd purchased an office building for R$675000$ on $1$ March $2020($useful life of $5$ years$)$

Fair value on $30$ June $2020$ was R$750000$

Fair value on $31$ December $2020$ was R$700000$

XYZ uses the cost model to measure PPE and the fair value model to measure investment property Prepare journal entries for the year ended $30$ June $2020$

QUESTION $5$

On $1$ March $2020$ A Ltd signed a $5$ year lease agreement for equipment. At the end of the lease, the ownership will transfer to the lessee. The equipment has a useful life of $5$ years with no residual value. The present value of the minimum lease payment was R$184665.$ The equipment had a fair value of R$184000$ at the time of the lease.

Discuss with reasons whether the lease should be classified as a finance or operating lease.