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Leases

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Leases

  • This topic has 3 replies, 3 voices, and was last updated 8 months ago by P2-D2.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • October 5, 2021 at 2:34 pm #637025
    qetidonadze
    • Topics: 3
    • Replies: 1
    • ☆

    Hi. My question is why finance cost (interest payable on the lease) is not a current liability according to the answer. Thank you

    On 1 January 20X6 Fellini Co hired a machine under a four year lease. A deposit of $700,000 was payable on
    the commencement of the lease on 1 January 20X6. The present value of the future lease payments was
    $1,871,100. A further 3 instalments of $700,000 are payable annually in advance. The interest rate implicit in
    the lease is 6%.
    What amount will appear under non-current liabilities in respect of this lease in the statement of financial
    position of Fellini Co at 31 December 20X6? [Answers to nearest $’000]
    Answer:
    Current 700,000
    Non-current 1,283,366

    October 6, 2021 at 8:42 pm #637164
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6119
    • ☆☆☆☆☆

    Hi,

    I suppose technically the payment of $700,000 being made next year will pay off the interest that has been accrued first in the current year, so there would be an interest payable balance.

    Thanks

    October 13, 2021 at 3:52 pm #637623
    jatingupta@2097
    • Topics: 0
    • Replies: 7
    • ☆

    Hi, in the Open Tuition Notes on the Lesse accounting question, the Indirect cost and the Incentive has not been considered in the Right to use asset and the Lease liability whereas in the Illustration it was considered, also in the notes, it was mentioned that the initial measurement will consider all the costs and incentives but the same hasn’t been done in that example. Can you please help me with that?

    October 16, 2021 at 9:19 am #637797
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6119
    • ☆☆☆☆☆

    Hi,

    Are you sure it hasn’t been accounted for? I think if you look at the answer and the journal entries then I believe that these costs have been included within the right of use asset.

    Thank

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    Posts
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