Finance lease example 2 — OpenTuition Forums

Ttrevon20209y ago

Hey, I'm seeking clarity on IAS 17 Leases Example 2 lecture. I understand how to calculate the capital element and the amount of instalment paid in each accounting period but what m not getting is why we use the (1500-623)=877. Isn't this amount accrued on the 1.7.2016 and pay on 31.12.2016 therefore should relate to the accounting period 2010 and not 2009, hence not included in current liability for 2009.

MikeLittleTutor9y ago#1

Which part of example 2? Is it Giedris or is it Giedruola? And please sort out the years in your post - the answers only go as far as 1 January, 2011so your references to 2016 are confusing the issue

Ttrevon20209y ago#2

Hey, it's Giedrius example 2 and it should read isn't this amount accrued on the 1.7.2010 and pay on 31.12.2010 therefore should it not relate to the period 2010? Giving the current liability as (795 +835)=1630 instead of (835+877)=1712. Just not clear on why the 877 was use as current when it's interest on 31.12.2010?

MikeLittleTutor9y ago#3

Trevon, you have missed the point of my initial enquiry Example 2 concerns both Giedrius AND Giedruola And both of them involve figures of $1,500 and $623 One more time please ... confirm that, within example 2, you are struggling with the answer to Giedrius and not Giedruola Thanks

Ttrevon20209y ago#4

The answer to Giedrius....

MikeLittleTutor9y ago#5

Can you accept that, after the instalment that was paid on 31 December, 2009, the capital amount outstanding was $13,295? And can you equally accept that, after the instalment that was paid on 31 December, 2010, the capital amount outstanding was $11,583? Therefore that capital amount that was paid in the year to 31 December, 2010 must be the difference between $13,295 and $11,583 = $1,712 The $795 that you refer to was paid within the instalment that was paid on 31 December, 2009 (amount paid on 31 December, 2009 $1,500 includes interest of $705 accrued during the 6 months to 31 December, 2009 which therefore means that that $1,500 instalment comprised $795 capital and $705 interest) Is that any clearer?