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Dear Mr Mike,
The June 2015 exam tested lease premium on operating leases.
The question goes thus “The operating lease payments represent an
annual payment (in advance) of $1 million and a lease premium of $1 million. The lease is for 4 years”How do we treat this? Do we take the whole $2M to Profit or loss?
Or do we time-apportion the lease premium and take $250,000 to profit or loss and then treat $750,000 as prepayments in the SOFP?
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