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Sir, kindly explain the $6m early penalty treatment and how to a/c for the whole leased asset, I’m unable to understand, I do get that we deal with assets in accordance with their specific standards first before dealing with IFRS 5
I think the answer may be out of date.
If you cancel a lease early:
1. Write down the Right of Use asset to $0 – to P&L.
2. Compare the CA of the lease liability with what will now have to be paid, and put any difference in P&L.I would recommend that you ignore that part of that question as the answer may have been written under the old rules.
If I’ve missed the point of your question, please come back to me, but give enough detail so that students and I know what the problem is.
Oh ok, your points totally make sense and as that’s what I remember from your lectures as well. Thank you
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