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Hi Mike,
I am just having trouble with the split lease treatment.
I am looking at the Techinical Article on this topic https://www.accaglobal.com/content/dam/acca/global/PDF-students/2012/sa_oct10_f7.pdf Example 3
I can see that the Non Current Liability for the finance lease is the capital outstanding at £9,250 and the Current Liability is (18,375 – 9,250) £9,125 .
What i don’t understand is why the Current Liabilty only includes 6 months worth of interest and not 12 months worth?Thank you!
DanielleBecause only 6 months’ worth of interest is accrued and unpaid as at the year end. The next 6 months’ worth has not yer been incurred and theory suggests that the lessee, having won the lottery, could repay the capital amount “tomorrow” and no further interest would therefore be charged.
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