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non current assets

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › non current assets

  • This topic has 1 reply, 2 voices, and was last updated 9 years ago by MikeLittle.
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  • November 4, 2015 at 5:48 pm #280513
    mansoor
    Participant
    • Topics: 424
    • Replies: 542
    • ☆☆☆☆

    an operating lease on a property has 8 years left. the annual rental is 2.3m.

    at the start of the year, the company got permission to make alterations to the property for 7m and agreed to pay for the restoration costs at the end of 8 years. the present value @8% is 5m.

    my SOPL extract was correct so am not producing it here

    in the extract for SOFP

    NCA = 12000 – 1500 = 10500 ——this was correct
    NCL = 5000 + 5000×8% = 5400 ——this was correct also
    ————————————————–

    but i also added a figure of 5400×8% =432 as current liability as well.

    please take me back to f3 just explain why am i not getting this

    thanks

    November 5, 2015 at 5:49 am #280569
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23327
    • ☆☆☆☆☆

    Because that interest has not yet accrued – it relates to next year, not this year. If you’re going to accrue future interest, why not accrue it for the full 7 years? In that case, there’s no point in working with present values!

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