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In the following answer to problem No 3 in the following link:
https://www.accaglobal.com/content/dam/ACCA_Global/Students/resourceFinder/SBR_INT_SD21_As.pdf
there is a statement that: “There will be no effect on EBITDA if Stem Co leases or buys the car…”. I donot understand this statement, as the servicing charge will still be included in operating expenses, and this will decrease the EBITDA; therefore, if if Stem Co leases or buys the car, EBITDA will decrease.
Please explain this to me.
Thanks!It means that EBITDA will be the same whether you buy or lease. In both cases the service charge must be deducted.
I hope you’ve watched my debrief. 🙂
In the answer to part b (ii): “Using exhibit 2, discuss why Stem Co’s investment in EmphasisCo should be classified as a joint venture and how Stem Co should account for its interest at 1 January 20X7 in accordance with IAS28 Investments in Associates and Joint Ventures.”, I see that the model answer firstly gives definition for a joint venture, and then the way of accounting for the investment under IAS 28, and then applies to the situation of Stem Co’s investment in EmphasisCo.
I want to ask whether this is the standard way to present an answer in SBR: firstly give the theories related to the question and then apply to the scenario?
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