Finance lease liability

No! The figure for the cash flow is the sum of the brought forward plus the expense in the income statement less the amount carried forward

OK?

Brought forward is 2,000 + 800. Income Statement charge is 300. Carried forward is 4,800 + 1,700. So the missing figure is the difference between 6,500 Debits and 3,100 credits. That missing figure is explained by the new leased plant of 5,800 ( that’s 6,500 closing balance less the brought forward figure of 2,500 and the depreciation on the leased plant of 1,800 ) and the cash paid.

So …..3,100 credits ( from above ) + the new leased plant of 5,800 gives us 8,900. Deduct from that the 6,500 leaves 2,400 paid in total to the finance lease creditors. But 300 of that relates to the finance lease interest and is included as a given amount of 1,000 and is shown as “interest paid” within the cash flow. So only 2,100 of the missing 2,400 is a capital repayment.

The b/f, I/S, c/f = cash is only applicable here if there had been finance lease interest accrual at the start and / or end of the year and that would have given you the figure for the finance lease interest PAID. But in Deltoid, we are given no indication of any finance lease interest outstanding, neither at the beginning nor end of the year. So, interest PAID has to be the same amount as the figure in the Income Statement charge and the finance lease creditor information is there for you to calculate the CAPITAL payment to the finance lease creditors

OK?