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Dear Chris,morning to you. Hope you are doing well and safe.I have a question in lease.My question is …Cornet co. Has entered into an agreement for the right to use an asset for a period of eight years on 1 July 2014.The useful life of an asset at that date is 10 years.The lease requires annual lease payments of $750000 in arrears.The present value of the future lease ok n commencement of lease is 4,657,500.The interest rate implicit in the lease is 6%.Additionally,Cornet co paid directly attributable costs of $37500 on July 2014.
What is the total charge to the statement of p&L for the year ended 30 June 2015 In respect of the right of use asset using the options in the pull-down list.
A)586,875
B)866,875
C)279450
D)1029450Hi,
I’m very well, thanks. I hope the revision is going well.
The figure they will be looking for is the depreciation as this is the charge to SPL in relation to the ROU asset.
You will therefore need to calculate the value of the right of use asset (don’t forget to include the directly attributable costs) and then depreciate it over the eight years.
Have a go and see how you get on. If you don’t get the right answer then let me know and we can try to fix it further.
Thanks
Hi Chris,even I was thinking the same.But this is in exam kit (que no. 110)and they have included interest of lease liability as well.Answer is 866325
Hi,
I think they also want the finance cost to be included too but in my opinion that is not a cost in respect of the right of use asset. The question would be better phrased asking for the total expense related to the lease.
Thanks
Shiba Co entered into a lease for a right of use asset on 1 January 20X7. The lease contract is for four years and the useful life of the asset is six years. Information relating to the lease is as follows:
Initial lease liability $48,000
Deposit paid on 1 January 20X7 $2,000
Direct costs incurred by Shiba $5,000
Maintenance costs of $2,000 per annum $8,000What will be the carrying amount of the right-of-use asset at 31 December 20X8?
$41,250
$31,500
$27,500
$36,667
You need to attempt the question first, showing me your answer before I can then help you. Look forward to hearing back from you so that I can help. Thanks
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the answer i got for that question is 35334.34, but that is not there in the option
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