no mistake in reproduction
bpp kit question:
"
Branch acquired an item of PPE on a finance lease on 1 jan x1. the terms were:
deposit: 1150
installments: 4000 pa for 7 years in arrears
cash price: 20000
useful life: 4 years and interest implicit 11%.
"
we are supposed to make the extracts for 31 dec x1
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the answer uses the cash price as the cost of the asset. but i calculated the individual pvs for each year and came up with 18849.
4000/1.11 =
4000/(1.11)^2 =
4000/(1.11)^3 =
and so on
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where am i going wrong?
joys of self study prep!!!!!
Ask the Tutor ACCA FR
finance lease 3
OH wait!!!!
if we do 20000-1150=18850, which is the same the pv. does this have anything to do with using the 20000?
When you apply the discounting to the payments, why have you not included in the payments the 1,500 and a discount factor of 1?
Yes, of course it has something to do with it!
I ask again - have you watched the lecture? I'm sure all of this is explained in the video!
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