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Dear Tutor, in the question Farham (Sep 2018), one of issue is to sell Newwall which has been making substantial losses.
the expected costs from the sale are as follows:
future trading losses $30m, it included an early termination penalty of $6m for a leased asset which deemed surplus to requirements. this description makes me confused.And its relevant answer: “the disposal group includes leased assets, the right of use assets deemed surplus to requirements will most likely be written off with a corresponding expense recognised in P/L”.
Would you please explain it by using double entry?
Many thanks
Lease asset
Dr P&L Cr Right of Use Asset
Lease liability
Dr Lease liability Cr Cash (6m) Balance to P&L
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