Question 77 (past exam question as adjusted) On 1 June 2013 Don Giovanni Limited leased a stone cutting machine. The terms of the lease were as follows: Five annual instalments (payable in advance) Cash purchase price of machine (on 1 June 2013) (= Present Value of the lease rentals) The lease has an effective interest rate of 10.4% pa The machine has a useful economic life of 6 years. Required: 2,900 12,000 (a) Prepare the entries in the SPLOCI and Statements of financial position of Don Giovanni Limited for the lease for the years ended 31 May 2014 (8 marks) and 2015. (b) Explain two possible exemptions available to a company's from applying the capitalisation requirements of IFRS16. (2 marks) Total 10 marks