MWANJOMBE Limited entered into a four year lease on 1 January 2022 for a machine. Rentals are TZS 20, 000,000 p.a payable in advance. MWANJOMBE Limited incurs initial direct costs of TZS 5, 000, 000. The rate of interest implicit in the lease is 10 % . Machine has a useful life of five years. REQUIRED Prepare extracts from financial statements for the year ended 31st December 2022 - 2025

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Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.