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dear tutor
could you please help me to understand the question, the last sentense states ” penalty of $6m for a leased asset which is deemed suplus to requirements”.
I really don’t understand what is implicated, what does “deemded suplus to requirements” mean? the answer says” it should be written off with a corresponding expenses to profit or loss”, why?
many thanksalso, what is the last sentense in the answer try to explain?
“the $6m will be offset against the corresponding lease liability with only a net figure being recorded in profit or loss”If a leased asset is no longer required then it will be written off with an expense in the profit and loss account.
Assume that the existing lease liability is five but we need a provision of six. In that case there would be a charge in the profit and loss account of one
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