• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

December 2023 ACCA exams:

Post and read comments and Instant poll >>

SALE AND LEASE BACK

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › SALE AND LEASE BACK

  • This topic has 3 replies, 2 voices, and was last updated 1 year ago by P2-D2.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • September 30, 2022 at 5:45 pm #667603
    Eunice03
    Participant
    • Topics: 88
    • Replies: 70
    • ☆☆

    400. ATLAS
    Revenue includes the sale of $10 million of maturing inventory made to Xpede on
    1 October 20X2. The cost of the goods at the date of sale was $7 million and Atlas has an option to repurchase these goods at any time within three years of the sale at a price of $10 million plus accrued interest from the date of sale at 10% per annum.
    At 31 March 20X3 the option had not been exercised, but it is highly likely that it will
    be before the date it lapses.

    ANSWER
    Non?current liabilities
    In?substance loan from Xpede
    (10,000 + 500 accrued interest (W3)) 10,500

    Good day, Please i don’t understand why the interest of 500 was included in non-current liabilities and not current liabilities since it would be paid in 6 months time.I also don’t understand why the remaining interests of 2000 for the next 2 years was not included in non-current liabilities. I’ll appreciate if you can explain better.

    October 1, 2022 at 9:50 am #667636
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6764
    • ☆☆☆☆☆

    Hi,

    We are just accruing the interest, there is no obligation to pay anything until the end of the agreement and so it is non-current.

    We do not need to account for the future interest accruals as they are future obligations, not present obligations.

    Thanks

    October 1, 2022 at 8:39 pm #667663
    Eunice03
    Participant
    • Topics: 88
    • Replies: 70
    • ☆☆

    But by carrying out the sale, isn’t the 2000 already a present obligation with a deferred payment date?I thought that was the point of non current liabilities

    October 5, 2022 at 5:01 pm #667918
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6764
    • ☆☆☆☆☆

    No, as we are matching the interest expense to life of the financing arrangement.

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

 

ACCA Qualification syllabus changes for 2023/24

Need verifiable CPD for 2023? 21 units of FREE CPD on offer from ACCA

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

PQ Magazine

Latest Comments

  • Ken Garrett on Environmental analysis – ACCA Strategic Business Leader (SBL)
  • Jawaher on Double Entry Bookkeeping (part a) – ACCA Financial Accounting (FA) lectures
  • UzairA365 on Environmental analysis – ACCA Strategic Business Leader (SBL)
  • UzairA365 on Environmental analysis – ACCA Strategic Business Leader (SBL)
  • John Moffat on Investment Appraisal – NPV, IRR – ACCA Management Accounting (MA)

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in