Bush Co leases a train over a 3-year term commencing on 1 June 20X5. The discounted present value of the future lease payments is $64.427. The interest
rate implicit in the lease is 8% and lease payments of $25,000 are required annually in arrears.
What is the carrying amount of the lease liability at 31 May X7?
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FRLease
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Do you happen to have the answer to the above question. I believe it's either $25000 or zero. Normally the way these questions ate structured it would be zero.
For more information about how this sort of calculation is carried out, please see the following link-
https://www.accaglobal.com/gb/en/student/exam-support-resources/fundamentals-exams-study-resources/f7/technical-articles/accounting-for-leases.html
Please also use the resources on this website. Please use the video lectures and the notes designed to be used in conjunction with these lectures as well as the forums and other resources on this site.
If you have anymore questions about the above specifics of these type of calculations or anything else please feel free to ask. Hope this helps.
At OpenTuition, you have to specify where you face a problem as the primary aim is to provide you with knowledge. Not just answers.
31.05.20X6
64,427 + 64,427×0.08 - 25,000 = 44,581
31.05.20X7
44,581 + 44,581x0.08 - 25,000 = 23,148
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