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Dear Sir,
I am confused with CL and NCL when calculation leases :/
I do all the calculation correctly but then I’m confused which numbers (which years) to pick.
And I can’t see a logic/ patern to follow as it is different depending on payment made in advance or in arrears.
For example in 1 question with payments in arrears the NCL was bf in the following year and CL the difference between the two but in the question with payment in advance the CL was a payment made in the year! So why is it not the same when we making payment in the end of the year?If you set out the table as I have done in the lecture (and, from memory, in the course notes) and put dates against the various payments, it should become obvious how much CAPITAL is outstanding at any particular date and that then gives you the information for the current / non-current split
Some answers don’t separate out the capital current liability from the accrued interest current liability – I always do, I think it makes it easier to follow
Is that ok – try using the tabular approach that I do in the lectures but don’t take the table all the way through to the final installment! The examiner regularly “complains” that they are faced often with a long schedule listing all the payments due under the contract and it’s a waste of time going beyond what is necessary
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