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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?
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?
what is the different between IFRS 16 and IAS 17 for leasing accounting in
Why would you want to know? IFRS 16 is not in the F7 syllabus