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On 1 October 2008 Number Co entered into an agreement to lease a machine that had an estimated life of four years. The lease period is also four years with annual rentals of $10,000 payable in advance from 1 October 2008. The machine is expected to have a nil residual value at the end of its life. The machine had a fair value of $35,000 at the inception of the lease. The lessor includes a finance cost of 10% per annum when calculating annual rentals.
How should the lease be accounted for in the financial statements of Number for the year end 31 March 2010?
How do v come to know it’s split lease
Thank u soo much sirIn technical article f7 11th topic is accounting for lease under that I saw this new topic and they had explained with this example
I did not come to know how do v come to know that this problem is split lease answer for this problem is 35000-100000+1250+1250 =27500
If you are referring to the article that analyses IAS 17, forget it!
IAS 17 no longer exists and has been replaced by IFRS 16
I still don’t recognise the expression “split lease” unless you are referring to an agreement where there is a lease element and an on-going period of servicing and support
If that’s the case, give me a reference so that I can look again at the question Numbers
Hmm it’s ok sir I came to know that if the lease starts for 6 moths v can find out NCL through that format
Actually when I had written online mock Dec 2017 it had come I did not know how to answer it and in BPP 163 Fino case sum it has come question is like thisOn 1 April 20X7, Fino increased the operating capacity of its plant. On the recommendation of the finance director,
Fino entered into an agreement to lease the plant from the manufacturer. The initial measurement of the lease liability
is $350,000. The lease required four annual payments in advance of $100,000 each commencing on 1 April 20X7. The
rate of interest implicit in the lease is 10%. The lease does not transfer ownership of the plant to Fino by the end of the
lease term and there is no purchase option available
What is the amount that should be shown under non-current liabilities at 30 September 20X7 in respect of this
plan?
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