Gamma prepares its financial statements to 31 March each year. Notes 1 and 2 contain information relevant to these financial statements:

Note 1 – Sale and leaseback of property
On 1 April 20X6, Gamma sold a property to entity A for its fair value of $1,500,000. The terms and conditions of the sale satisfy the sale and leaseback requirements of IFRS® 15 – Revenue from Contracts with Customers. The carrying amount of the property in the financial statements of Gamma at 1 April 20X6 was $1,000,000. The estimated future useful life of the property on 1 April 20X6 was 20 years. On 1 April 20X6, Gamma entered into an agreement with entity A under which Gamma leased the property back. The lease term was for five years, with annual rentals of $100,000 payable in arrears. The annual rate of interest implicit in the lease was 10% and the present value of the minimum lease payments on 1 April 20X6 was $379,100. (12 marks)

Note 2 – Purchase of new machine
On 1 April 20X6, Gamma purchased a machine from a foreign supplier. The cost of the machine was 900,000 dinars. Gamma paid this amount to the supplier on 30 June 20X6. The estimated useful life of the machine at 1 April 20X6 was eight years. However, the machine contains a component which will need replacing after four years. On 1 April 20X6, the directors of Gamma estimated that 30% of the original cost of the machine was attributable to this component. Relevant exchange rates (dinars to $1) were as follows:

Gamma uses the cost model to measure all of its property, plant and equipment. (8 marks)

Required:
Using the information in notes 1 and 2 explain and show how the two events would be reported in the financial statements of Gamma for the year ended 31 March 20X7.

Note: The mark allocation is shown against each of the two notes above. (20 marks)