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Hi Chris,
I’m really confused as to which amount should we take the interest % from? Because in your lectures you have shown it using the outstanding amount whereas in the practise questions answer you have calculated it from the PV.Thank you.
Have good day 🙂Hi Sir,
In example 1 of the leases… what if their hadn’t been the rent-free period in the first year..how would we record the transaction then?
Thanks,
@johann2018 said:
Hi Sir,In example 1 of the leases… what if their hadn’t been the rent-free period in the first year..how would we record the transaction then?
Thanks,
Hi,
It would still be accounted for in the same manner, i.e. total up the payments and divide by the number of years on the lease. It isn’t very exciting though as the expense is just the same as the payment.
Thanks
I mean to say that in the leases notes (Example 2) you have shown it:
Brought forward – Cash = Outstanding amt. + Interest
Where the 887 amount you got it from 17730
But in the practice question Chapter 12 (Question no 4 answer) you have shown it:
Brought forward + Interest – Cash
Meaning you have taken the interest amount from the brought forward figure.
Hope I’m clear now.
Hi,
It all depends on when the payments are made. If the first thine we are deducting from the carried forward figure is the cash payment then the payments are in advance. If the payments are in arrears then we deduct that after charging the interest for the period.
You need to read the question carefully to understand when the payments are made.
Thanks
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