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    Ijarah and Mudharabah Exercise

    Uploaded by

    AhmadNajmi
    The document discusses two Islamic finance contracts: 1) An ijarah (lease) contract between Bank Al-wafa and JayaPadu Berhad for equipment worth RM120,000 over 4 years, with rental payments of RM12,000 per month. 2) A mudharabah (profit-sharing) contract between Bank Shari'ah, Company A, Company B, and Company X over 5 years, where profits and losses are shared in specified ratios between the parties. The mudharabah experienced profits in years 3, 4, and 5 and losses in years 1 and 2.

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    Ijarah and Mudharabah Exercise

    Uploaded by

    AhmadNajmi
    262 views3 pages
    The document discusses two Islamic finance contracts: 1) An ijarah (lease) contract between Bank Al-wafa and JayaPadu Berhad for equipment worth RM120,000 over 4 years, with rental payments of RM12,000 per month. 2) A mudharabah (profit-sharing) contract between Bank Shari'ah, Company A, Company B, and Company X over 5 years, where profits and losses are shared in specified ratios between the parties. The mudharabah experienced profits in years 3, 4, and 5 and losses in years 1 and 2.

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    islamic finance

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    The document discusses two Islamic finance contracts: 1) An ijarah (lease) contract between Bank Al-wafa and JayaPadu Berhad for equipment worth RM120,000 over 4 years, with rental payments of RM12,000 per month. 2) A mudharabah (profit-sharing) contract between Bank Shari'ah, Company A, Company B, and Company X over 5 years, where profits and losses are shared in specified ratios between the parties. The mudharabah experienced profits in years 3, 4, and 5 and losses in years 1 and 2.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    262 views3 pages

    Ijarah and Mudharabah Exercise

    Uploaded by

    AhmadNajmi
    The document discusses two Islamic finance contracts: 1) An ijarah (lease) contract between Bank Al-wafa and JayaPadu Berhad for equipment worth RM120,000 over 4 years, with rental payments of RM12,000 per month. 2) A mudharabah (profit-sharing) contract between Bank Shari'ah, Company A, Company B, and Company X over 5 years, where profits and losses are shared in specified ratios between the parties. The mudharabah experienced profits in years 3, 4, and 5 and losses in years 1 and 2.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
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    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

    1
    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.

    2
    3

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