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You are required to justify the following situations whether the lease agreement is to be categorised as a finance lease or an operating lease. A
- You are required to justify the following situations whether the lease agreement is to be categorised as a finance lease or an operating lease.
- A company has entered into a four-year lease for a machine usage, with lease rentals of RM150,000 payable annually in advance, and with an optional secondary period of three years at rental rates of 80%, 60% and 40% of the annual rental in the primary period. It is agreed that these rental rates represent a fair commercial rate. The machine has a useful life of eight years and a cash value of RM600,000.
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