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Dear Mike,
Regarding Reconciliation of minimum lease payments to P.V for Giedruola,
as per written answer from the course notes:Finance Lease interest not yet accrued: 4,705
I assume the calculation behind this figure is the following:
Sum of min lease pmts & Dpsit: 21,410
Less: F.V (16,000)
Interest: 5,410
Less: Int pd in 2009 (705)
= 4,705However interest for 2009 as per SOCI is 1,310. So should not the interest figure on the reconciliation be 4,040 instead of 4,705?
Many thanks for your kind help.
Regards,
Isabel
Hi, I don’t have the question readily to hand so I’m flying in the dark, but here goes
From memory Giedruola differs from Giedris in that the timing of the payment sis in advance rather than in arrears.
You have tackled the interest element from a different perspective than I would. I look at the capital amount still outstanding at the end of e year and deduct that figure from the total contracted payments less amounts actually paid
If that doesn’t answer your query, then please post again and I’ll look up the question when I get home this coming Thursday
Thank you Mike.
I understand your calculation.
However on the disclosure of the reconciliation from total of minimum of lease payments to arrive to P.V as at y.e.
The reconciling figure is finance interest not yet accrued. If the figure of 665 has been accrued for on St of F.P shouldn´t be also substracted from 4,705?
Could you please clarify if the logic behind my assumption is right?The difference on the payment terms from Giedruola and Giedrius is that Giedruola pays on 1st of January and 1st of July and Giedrius pays 31th of December and 30th of June.
Thank you very much.
Regards,
IsabelAh-ha! I see your point! However, I’m pretty sure that the expression “not yet accrued” is an abbreviation for “not yet accrued due for payment”
The idea is to show how much interest is still outstanding from the total figure payable and that total figure includes the 665 payable “tomorrow”
Is that better?
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