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Good day Sir,
GD entered into a four year operating lease of a motor vehicle at $1500 pa payable at the end of the yea. The lease commenced on 1 Dec 2014 when GD negotiated a one year rent free period
Calt the amt to be recognised in the F/S for the year ended 31 March 2015.Solution
$1500* 3yrs=4500
Spread over 4years I.e 4500/4=$1125*4/12
=$375 (SOPL)
$nil- (SOFP)
I understand this should be debited to p&l
Because it is operating leaseHowever, the answer says
SOFP (accrual)-375
SOPL -375.
I’m a bit confused because I’m of the opinion that with operating lease, nothing is recorded in SOFP .Kindly explain. Thanks for your time.
You’re correct that there is no asset, no depreciation implication, no long- nor short-term obligation
However, that $375 that relates to the 4 months ended 31 March, 2015 …. has that been paid? Or is it still due as at 31 March, 2015?
And, if it’s still due, that makes it a liability doesn’t it?
‘Nuff said?
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