Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › 2 years lease -small amount
- This topic has 2 replies, 2 voices, and was last updated 1 year ago by alawi sayed.
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- May 30, 2022 at 8:36 pm #656908
Hello Sir,
Here do we have to take lease as expense in profit and loss intead of asset because of the lease agreement being in small amount even though it is for a period of two years?
Thanks .
Q
Agreement two:This is a two-year agreement, commencing on 1 July 20X5, for 10 computer tablets to be used by senior management. The purchase price of each tablet is $1,000. Blocks Co will make 24 monthly payments of $550 and legally own the tablets when the final payment has been made. The present value of the future cash flows is $11,000.
For agreement two, what amount of asset should be initially recognised on the commencement of the lease?
1 -$5,500
2- $10,000
3- 0
4 -$11,000
The Answer is
0
May 31, 2022 at 8:59 pm #657010Yes, this is a low value asset and so a simple expense through profit or loss each year. The additional information in the question is trying to confuse things within the question.
Thanks
June 4, 2022 at 8:00 pm #657384Thanks a lot Sir.
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