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I am confused on this part:
Please correct me on the below.
IFRS 16: for a lease contract to exist, the lessee ( the user of the asset) need to have right to:
1) Obtain substantially all the economic benefits from use of the asset
2) direct use of the assetHere: Lifeson has sold the property to Clive and then lease it back for 10 years.
Lifeson will obtain ‘part’of the economic benefits from use of the asset. It does not say Lifeson can direct the use of the asset or (I assume that Clive will direct it).
So how can I recognise it as lease in the FS of Lifeson?
Lets say:
Cost: 2000, Depreciation: 500
Capital allowance y1: 800, y2: 600
Tax rate: 25%Carrying value in y1: 2000-500= 1500
Tax base: 2000- 800= 1200
Temporary difference= 300
Deferred tax liability: 25% × 300= 75Now lets says that depreciation has reduced to 400
Cv in y1: 2000-400=1600
Tax base: 1200
Temp.diff: 400
Defer tax liabilty: 25% ×400= 100Deferred tax liabilty has increased to 100= equivalent decrease in depreciation.
Is my understanding correct?
*So based on the scenario in the past exam it will increase but not significantly, may indicate overstatement of liability.
Since my next question is related to your answer above, I am continuing on the same thread.
Sigra co 12/12
Gain under share exchange – offer of 3 of its shares for 2 of dentro co shares.To calculate share price of combined co:
If we assume in this case too that the no of shares is: sigra: 11000 + dentro 1250 = 12,250,000 instead of 12,875,000 will it be correct?Sorry I mean deduct the $ 1200.
Isn’t it capital expenditure?
To get the cash flow don’t we have to deduct it?Thank you.
Thank you.
Another question:
Why the additional investment $1200 is not added back?And to calculate equity value of mining unit:
corporate value – NCL ( bank overdraft of 1800). CL payables 750 is ignored?Thank you.
Another question : march 2018 Tippletine Co
1 b) I find part b difficult. But it was simply to discuss the adv & disad of convertible loan notes.The other shareholders may be concerned by the interest rate on the convertible notes being Tippletine Co’s normal cost of borrowing. The option to convert is an advantage for convertible loan note holders. They would often effectively pay for this option by receiving a lower rate of interest on the loan notes.
Can you please explain this to me. How come they receive a lower rate of IR?
Thank you Ken. 🙂
Assuming 25% improvement, then how much it will generate in terms of cost savings? did the examiner calculate it based on the figures? the $4 cost saving refers to the scrap value figures.
Another question: Dec 2016 Question 2(a)
How is the exchange rate calculated for the cost of sales figures?
Previous rate: C$1= V$1.40 and current rate: C$1 = V$1.50why is it deducted from minus 1 (-1) ?
Also, how is the fuel tax increase for the distribution costs calculated?
3/160?Thank you Ken. 🙂
Assuming 25% improvement, then how much it will generate in terms of cost savings? did the examiner calculate it based on the figures? the $4 cost saving refers to the scrap value figures.
Another question: Dec 2016 Question 2(a)
How is the exchange rate calculated?
Previous rate: C$1= V$1.40 and current rate: C$1 = V$1.50why is it deducted from minus 1 (-1) ?
Dear,
I have used this method for secure net.
operational price variance = (actual price – std price)X actual kgs
planning price variance = (std price – revised price) X actual kgsoperational usage variance = (actuals kgs for actual production – revised kgs for actual production) X std kg
planning price variance = (std kgs for actual production – revised kgs for actual production) X std price.Please confirm if i can use this method. (like in Truffle and Bedco Manufacturers Dec 2013)
I got confused when the rate changed to 95%.
It was simply applying the rule ‘ Every time we double production, the average time falls to a percentage of the previous average time.’
Thanks a lot. 🙂
