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Finance lease example 2

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Finance lease example 2

  • This topic has 5 replies, 2 voices, and was last updated 8 years ago by MikeLittle.
Viewing 6 posts - 1 through 6 (of 6 total)
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  • November 14, 2016 at 12:46 am #348780
    trevon2020
    Member
    • Topics: 7
    • Replies: 14
    • ☆

    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.

    November 14, 2016 at 7:38 am #348810
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    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

    November 14, 2016 at 9:55 am #348836
    trevon2020
    Member
    • Topics: 7
    • Replies: 14
    • ☆

    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?

    November 14, 2016 at 11:39 am #348879
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    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

    November 14, 2016 at 10:32 pm #348969
    trevon2020
    Member
    • Topics: 7
    • Replies: 14
    • ☆

    The answer to Giedrius….

    November 15, 2016 at 7:43 am #348996
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    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?

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