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The following scenario relates to questions 376–380
Extracts from Depay’s financial statements for the year ended 30 September 20X2 are shown
Statement of profit or loss extract: $000
Finance costs (60)
Statement of financial position extract:
5% loan notes 515 500
Lease liabilities 300 310
The following information is relevant:
(ii) $40,000 of the finance costs relate to the loan notes which are repayable at a premium,
making the effective rate of interest 8%. The remaining interest relates to the lease
(iv) Depay acquired $70,000 of new assets under lease agreements during the year. Depay
makes annual payments under leases on 30 September each year.
377 What will be recorded in Depay’s statement of cash flows under interest paid?
The answer to the following question is C ie 45000 (20000+ 25000)
I understood that interest paid for loan notes will be 5% × 500000 = 25000
Finance cost for lease liability would be 60000- 40000(8%×500000) = 20000
But they have taken lease liability paid as 20000
How did we conclude that the finance cost of 20000 relating to lease liability WAS PAID in the year?
If 20,000 has been recorded as interest related to leases then this will have been paid in the year as part of the annual lease payment. The annual payment made consists of an interest element, and a capital element. The 20,000 relates to the interest paid.
Hi, Someone can guide us how to get the “cash and cash equivalent at start of year”
i try to get the previous year “Profit after Tax” but the answer is wrong.
Thanks in advance.
The cash and cash equivalents will be the cash figure net of any overdraft figure.
Got it thanks sir