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Danio Leasing Sdn Bhd entered into a finance lease arrangements with Tetra Bhd for a vintage car. Danio leasing Sdn Bhd imported the car

 

Danio Leasing Sdn Bhd entered into a finance lease arrangements with Tetra Bhd for a vintage car. Danio leasing Sdn Bhd imported the car at a price of RM1,000,000. The lease term is for four years and the lease agreement requires a yearly lease payment of RM250,000. At the end of Year 4, Danio Leasing Sdn Bhd will repossess the vintage car and then offer the car for sale to Tetra or by auction. Tetra Bhd has guaranteed a residual value of RM400,000 at the end of Year 4. However, Danio Leasing Sdn Bhd estimates that the residual value is more likely to be about RM500,000. Required: a. Determine the amount of lease debtor that Danio Leasing shall record at the commencement of the lease b. Determine the carrying amount of the lease debtor at the end of each year and the related interest income for each year.

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