Question 4 a) Marstock has leased an item of plant under the following terms Commencement of the lease was 1 January 20X2 Term of lease 5 years Annual payments in advance $12,000 Cash price and fair value of the asset- $52,000 at 1 January 20X2-equivalent to the present value of the minimum lease payments Implicit interest rate within the lease 8% per annum The company's depreciation policy for this type of plant is 20% per annum on cost Required: Explain which criteria are satisfied in order for the above lease to be classified as a finance lease. (0) 4 marks (i) Prepare extracts of the income statement and statement of financial position for Marstock for the year to 31 December 20x3 for the above lease and show your workings. Make sure to show current and non-current liabilities separately. 10 Marks b) Briefly explain the capital maintenance concept and why creditors require protection. Provide two reasons why companies may reduce their capital. 6 marks Total 20 marks