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- September 5, 2022 at 10:32 am #665212
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)1029450September 5, 2022 at 8:51 pm #665301Hi,
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
September 7, 2022 at 5:01 pm #665630Hi 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
September 11, 2022 at 9:00 pm #666180Hi,
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
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