Couldn't get the suggested answer for the question below. Kindly assist Prof.:
Can anyone help with this MCQ:
During the year ended 28 Feb 2015, Ahmed entered into two lease contracts as follows:
1) On March 2014 a payt of $120,000 was made as the first of four equal annual installments on a finance lease for an item of plant. The lease has an implicit interest rate of 10% and the fair value of the plant on 1March 2014 was $390,000
2) On 1 February 2015 a payt of $30,000 was made for a one year lease of an item of excavation equipment
What Amount in total should be charged too Ahmed statement of p/l for the year ended 28 February 3015 in respect of the above transaction
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10y ago#1Is it 154.5?
Yes sir. The question now is how did you arrive at it?
10y ago#3Cost 390
First installment (120)
Therefore borrowed 270
10% of 270 = interest of 27 interest for the year
Cost 390
Depreciation over 4 years 97.5 per annum
Operating lease payment of 30
Total 27 + 97.5 + 30 = 154.5
OK?
Thank you.
10y ago#5You're welcome
Sir, pls also assist with the MCQ below. I got $1,437,600 but the answer says is wrong and I don't get why. Below is the question:
On 30 April 2014, Algis's closing inventory was counted and valued at cost of $1.46m. Some items of inventory that had cost $140,000 had been damaged in a fire during March and are not expected to achieve their normal selling price which is calculated by adding a standard mark up of 40%. The sale of these goods will be handled by an agent specializing in fire-damaged goods who is expecting to sell them for 75% of the normal selling price and will charge Algis's a sales commission of 20%.
At what value will the closing inventory of Algis's be reported in its statement of financial position as at 30 April, 2014.
10y ago#7WHat figure does the answer give us?
Sir I know its not my post but I got 1 436 600. is it the right answer?
thx
10y ago#9I don't know - let's see what ifeoma says!
Can anyone solve the question on inventory pls.. Why isnt the answer 1436600?
10y ago#11I make it $1,437,600!
Ifeoma, is that an option in the answers? I know that you say that the printed answer says different but it's what I get too
Its an option but its wrong but thats what i got.
10y ago#13Could be a misprint in the answer book. If it isn't $1,437,600 then I can't see where I've gone wrong
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