Question
Tukangful Berhad and Bank Andalusia Berhad signed an ijarah deal to lease equipment for three years. On January 1, 2020, Bank Andalusia Berhad paid RM80,000
Tukangful Berhad and Bank Andalusia Berhad signed an ijarah deal to lease equipment for three years. On January 1, 2020, Bank Andalusia Berhad paid RM80,000 to a local vendor for equipment. Legal fees of RM2500 were also expended by the bank in connection with the ijarah contract, which the bank believed to be relevant.
The detail about the ijarah contract are as follows:
a) Number of instalments on quarterly basis 12
b) Rentals at the end of each quarter RM8,000
c) Estimated useful life 3 years
d) Estimated residual value at the end of useful life RM6,000
e) Estimated expenditure incurred in the 2nd year RM1,400
Additional information:
Fair value of equipment | RM |
At the beginning (1st January 2020) | 80,000 |
At the end of the lease (31st December 2022) | 4,000 |
Required:
Prepare journal entries to record the above ijarah contract in the books of Bank Shariah Berhad assuming the lease was treated as Ijarah Muntahia Bitamleek through sale for a token consideration (agreed to be equivalent to 50% of the estimated residual value at the end of useful life) for the following periods;
i. at the beginning of ijarah (3 marks)
ii. at the end of first year (3 marks)
iv. at the end of ijarah term (4 marks)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started