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accounting for finance lease

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › accounting for finance lease

  • This topic has 3 replies, 3 voices, and was last updated 8 years ago by MikeLittle.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • November 28, 2016 at 12:08 am #352028
    mandamoses1
    Participant
    • Topics: 1
    • Replies: 0
    • ☆

    suppose n 1 January 2016 ABC Company hired a machine under a finance lease. The cash price of the machine was $3.5 million and the present value of the minimum lease payments was $3.3 million. Installments of $700,000 are payable annually in advance with the first payment made on 1 January 2016. The interest rate implicit in the lease is 6%.
    What amount will appear under non-current liabilities in respect of this lease and the way it would be presented on the face of the statement of financial position of ABC Company as at 31 December 2017?

    November 28, 2016 at 6:51 am #352082
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    Well, I can do this even though it’s as strange question with present value being lower than fair value

    Show me your workings and I’ll let you know where you’re going wrong

    I’ll start you off:

    1. 1.16 Cost / PV 3,300,000
    1. 1.16 Paid 700,000
    31.12.16 O/s 2,600,000
    31.12.16 Int @ 6%156,000
    31.12.16 O/s 2,756,000
    1. 1.17 Paid 700,000
    31.12.17 O/s 2,056,000
    31.12.17 Int @ 6% 123,360
    31.12.17 O/s 2,179,360
    1. 1.18 Paid 700,000

    Can you take it from there?

    December 12, 2016 at 9:05 pm #363488
    diyami
    Member
    • Topics: 0
    • Replies: 2
    • ☆

    what is the different between IFRS 16 and IAS 17 for leasing accounting in
    recognition
    presentation
    measurement
    disclosure

    December 13, 2016 at 8:11 am #363508
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    Why would you want to know? IFRS 16 is not in the F7 syllabus

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