EXERCISE

IJARAH

Bank Al_wafa information on the lease transaction with JayaPadu Berhad are as follows:

Value of assets (Fair value) RM120,000 (as at 1.1.2013)

Type of assets equipment (4 years useful life)

Date of purchase 1st january 2013

Estimated residual value at RM2,000

the end of useful life

Lease period 4 years

Depreciation: using straight line method

The leases transaction above treated as Ijarah Muntahia Bitamleek with JayaPadu, where
the bank purchase the equipment from local trade in year 2013. There are legal fees incurred
relating to Ijarah contract amounting to RM2400.

Prepare journal entries to record the above Ijarah contract in the books of Bank Al-wafa
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:
* At the beginning of Ijarah;
* On receipt of first rental;
* At the end of first year; and,
* At the end of Ijarah term.
Other relevant information on leased equipment:

Fair value at the end of lease RM 1,000

period

Number of installments on 48
monthly basis

Rentals at the end of each RM12,000

month

MUDHARABAH

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Company A entered into a Mudharabah contract with Bank Shariah in which the
company provides monetary capital of RM2,000,000 to be managed and invested by the
Bank. The Bank provides Mudharabah al Muqayyadah Investment account facility whereby
the Bank will invest in a specific project as agreed by the client. For this project, there is
another investor, Company B who had agreed to invest RM1, 500, 000. the profit sharing
between three of them is in the ratio 4:2:1 for Company A, Company B and Bank
respectively. The Bank then entered into another Mudharabah contract Re Mudharabah
with Company X to undertake a housing development project and they had agreed on the
profit sharing ratio of 80:20 (Bank: Company X)

Bank Shariah had agreed to contribute RM5,000,000 as monetary capital based on a

five-year mudharabah financing contract (Mudharabah Muqayaddah.
You are required to determine the profit and loss to be shared at the end of the
contract by the four parties involved above.
Since that it stated the Bank has agreed to contribute RM5, 000, 000 for the capital, it means,
the remaining amount of RM1, 500, 000 is from the Bank. It shows that the Bank is also a
capital provider.

Here, when the loss is occurring, the Bank also has to bear the loss together with the
Company A and Company B. the Loss Sharing Ratio is based on the Capital Contribution
portion.
Company A: RM2, 000, 000
Company B: RM1, 500, 000
Bank: RM1, 500, 000
Example calculation for LSR : Company A (2, 000, 000 / 5, 000, 000) = 2/5
: Company B (1, 500, 000 / 5, 000, 000) = 1.5/5
: Bank (1, 500, 000 / 5, 000, 000 ) = 1.5/5

Year Profit/Loss

1 (500,000)

2 (400,000)

3 350,000

4 500,000

5 620,000

Determine the profit/loss of the above transactions. Show how profit/loss will be allocated for
all partied involved based on each period method and at the end of contract method.

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