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Question:
A company car held under an agreement that was taken out on 1 July 20X8.– The interest rate implicit in the least is 12%.
– The initial measurement of the liability is $50,000.
– It has a 10 year useful life. Sunder Co will repay $12,000 p.a. in arrears for 10 years.
– The first payment was made on 30 June 20X9.What amount should be shown under the non-current liabilities at 30 June 20X9 in respect of the company car?
Answer: $37,280
Workings:
Initial measurement of liability $50,000
Interest 12% $6,000
Paid at 30 June 20X9 ($12,000)
Balance at 30 June 20X9 $44,000
Interest 12% $5,280
Paid at 30 June 2020 ($12,000)
Liability due after 1 year $37,280I did the calculations right but I don’t understand why the answer isn’t $44,000? As the question is asking for NCL at 30 June 20X9.
Hi,
The answer is correct, as the $44,000 figure that you are talking about is the total liability at the reporting date of 30 June 20X9. This figure then needs to be split into the current and non-current aspects.
To find the NCL you look at the number immediately to the right of the final payment next year, which is the $37,280.
Thanks
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