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I’m having problems with understanding the splitting between current & non current liability when the lease payment is made at the end of the year (in arrears).Kindly, assist explain with a very basic example.Thank You.
There is an example in the course notes (Giedre and Giedrius)
The way to split it is to work out the CAPITAL amount outstanding at the end of this year and the CAPITAL amount outstanding at the end of next year (these amounts do NOT include the interest that has accrued since the last instalment payment, but that’s not an applicable concern where instalments are paid in arrears)
Next year’s amount is the deferred liability to be included in this year’s financial statements and this year’s amount less next year’s amount is the current liability to be included in this year’s financial statements
OK?
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