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sharly says

please Sir I need help,im lost, why does the interest charge calculation start from year Jan 2004, not Jan 2009?

MikeLittle says

Sharly – it’s the same answer as in my last answer to your last question.

The recording was made using a previous version of the notes. The figures haven’t changed – just the year end. To bring the question more recent, I have added 5 years onto 2004 and arrived at 2009.

All the calculations are valid / correct – it’s just that I didn’t re-record the lecture

OK?

MikeLittle says

Sorry Sharly, I answered this one before I read your next two!

sharly says

thank you sir! very clear now

MikeLittle says

You’re welcome

sharly says

on example 2 calculation for Giedrius why is it written deposit Jan 2004 $1152? I thought it is Jan 2009 as the question said that the deposit was 1 Jan 2009 $1152. why are we using the actuarial method in this example?

MikeLittle says

Hi Sharly

Where exactly does it say “deposit paid Jan 2004″?. The notes say 2009. The lecture may say 2004 but that’s because it was a recorded lecture from a previous (original) version.

You need, mentally, to move the years in the lecture forward by 5.

We are using the actuarial method because the rate of interest is given in the question

OK?

sharly says

ok Sir I clearly understand now … thank you Sir, no need to reply my second question again.

sharly says

so it means that interest in year jan 2005 will now be jan 2010, ok thank a lot.

kurpatel says

Hi all..does anyone know how the net figures came out of reconciliation of obligations under finance leases ..the gross is understood ..how was 2790,8793,1712 calculated…thank you for your help..Mike! Can you help?

MikeLittle says

Yes, but I wish that you had posted this on the Ask the Tutor page!

These figures represent the present day discounted value of the future instalments

So, $3,000 discounted at the rate of 10% for 1 year is $2,790 (it’s actually $2,727)

$3,000 discounted for 5 years at the rate of 10% gives us $1,712 (actually it’s $1,863 – that could also be incorrect – I’ve just arrived at the figure through mental arithmetic – I don’t have a calculator to hand)

I trust that that would have been helpful back in June!

Pavel says

Excuse me Mike, does it mean, that figures 2790 and 1712 in course notes are incorrect? Because if we simply calculate 3000 by dividing on 1.1 or (1.1)^6 – the figures are different

MikeLittle says

Hi Pavel – yes – if my most recent post calculations are correct, then the figures in the course notes are rounded badly. The figures in my recent post were done to a degree of accuracy not necessary in the exams – normally the examiner will expect you only to work to 2 decimal places – and that’s also in the rare event that there is a lease calculation question in the exam – that, itself, is highly unlikely

izabiello says

Guys, the way I understand it, is that the question is asking us for figures that will appear in financial statements at the y/e 31/12/2009. In other words they are asking us what will be treated as CL (payable within next 12 months time) and what will be treated as NCL (paid after 12 months from the y/e 31/12/2009). Therefore we need figures at y/e 31/12/2010 to figure out what will be payable within next 12 months from y/e 31/12/2009 (CL) and what will be paid afterwards (NCL).

Please correct me if I am wrong.

MikeLittle says

That’s correct!

fahim231 says

helllo i am still a little unclear on the logic of how to calculate the current liabilites and non current liabilities…….can you please explain this

rule3 says

I’m having trouble understanding the TNCA calculation. Can you please indicate what values are being used?

Thanks.

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