Question 3

On 1 June 2019 Danio plc leased a motor vehicle. The schedule of payments was as follows:

Due date	Payment
1/6/2019	10,000
1/6/2020	2,300
1/6/2021	2,300
1/6/2022	2,300
1/6/2023	10,620

The final scheduled payment is optional and is to terminate the lease and transfer outright ownership of the vehicle to Danio. Danio is likely to take the option to purchase the vehicle outright at the end of the lease. The useful life of the vehicle is 5 years with a residual value of 8,500.

The interest rate implicit in the lease is 5%.

Time	Discount factor at 5%
0	1.000
1	0.952
2	0.907
3	0.864
4	0.823

Required:

Prepare extracts from the financial statements of Danio plc for the year ended 31 May 2021.

You should show the figures that would be included in the following statements in respect of this lease for the 12 months ended 31 May 2021 and at the reporting date of 31 May 2021:

The income statement,

The statement of financial position,

The statement of cash flows.