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MVS says

Hi Mike,

I have got a question in reference to Reconciliation of Obligations under Finance Leases with the present value of the minimum lease payments

We know that from questions that the lease is for 7 years term. I cant get my head around why is it only 5 years is taken in to account. This is an extract from answers from lecture notes.

Why aren’t we saying that over 5 years are 2 x 3000, hence 6000. Why is it only 1 lease payment shown in payable more than 5 years.

Payable within 1 year 3,000

Payable more than 1 year, less than 5 years 12,000

Payable more than 5 years 3,000

I understand you are busy man but i will really appreciate Mike if you can please help.

MVS says

Sir, please ignore above. I was under the impression that this was from the reconciliation was from beginning of the time (start of lease) which is not the case. This will be dependent on the how many payment period has been lapsed.

Thanks.

olyakosh says

Dear Mr. Mike,

Could you tell me, please, for the task with Giedruola, how have you calculated “Financial lease interest not yet accrued” for “Reconciliation of Obligations…with minimum lease payments”?

Thank you in advance for answering my question.

Olga

thandiwe says

i dont even know where to start from am so confused everything was flowing well until 3minutes into the video then you lost me,i dont understand where those figures are coming from, please help me

MikeLittle says

I can only assume that you cannot see where the figures for interest come from. I suspect that you are not able to calculate 10% on an amount for HALF A YEAR.

If that hasn’t resolved your difficulties, please post again

thandiwe says

i got confused for a minute but after watching the entire video i now understand where a the figures are coming from, thank you

MikeLittle says

Ok, thanks for letting me know

kurpatel says

Thank you for a great lecture Mike. Could you please explain how the current liabilities and long term liability is calculated ? i am a bit confused about it, how come the log term liability is the remainder amount at the end of year 2 and current the difference between year 2 and year 1. what is the logic as we are preparing the financial statement as at the end of year 1 as per question? Thank you in advance

MikeLittle says

That’s an easy one! We know the total liability (say 30,000) at the end of the year and that total amount is payable over the next (say) 5 years. But we need to know how much is payable within twelve months (current) and how much is payable in periods more than twelve months hence (deferred)

If I calculate the amount outstanding at the end of NEXT year (say 23,000), then that figure represents the element of the current year’s total obligation (30,000) which will still be outstanding twelve months hence.

Thus we can see that, of that 30,000, 23,000 will not be paid in the current year and is therefore deferred whereas our liability will fall by 7,000 (30,000 – 23,000) over the next twelve months and that must represent the current element of the 30,000

OK?

Accountaholic says

@ MikeLittle:

I got the logic behind calculating Current Liability. However can you please explain why we take the figure as at the end of the next year as NCL?

Thanks

babubamfo says

i want to understand leasing ias 17.can someone help me out.

absylum007 says

i read the previous comments and like them i am confused too , how did you get TNCL (total non current liabilities ) and TCL(total current liabilities figure ) ????

MikeLittle says

Read my reply to Ahmer and see if that clears up the confusion