Скачать или смотреть IFRS 16 Lease Accounting Case Study Explained

With a help of AI and case study converted into video for educational purpose. I hope you all will enjoy the same. Thanks.

Case Study 1 :
Paul enters into an agreement to lease an asset. The terms of the lease are as follows.
1 Primary period is for four years from 1 January 20X2 with a rental of $4,000 pa payable on 31 December each year.
2 The present value of the lease payments is $11,420
3 The interest rate implicit in the lease is 15%.

What figures will be shown in the financial statements for the year ended 31 December 20X2?
Solution:-
A non-current right-of-use asset is recorded at an initial value of $11,420
Annual depreciation charge = 1/4 × $11,420 = $2,855
A liability is initially recorded at $11,420

The total finance charge for the lease is calculated as the difference between the total payments of $16,000 (4 × $4,000) and the initial value of $11,420 = $4,580. The allocation of this to each rental period is calculated using the implicit interest rate in a lease liability table as follows:

Period Liability b/f Interest @ 15% Payment Liability c/f
20X2 11,420.00 1,713.00 (4,000.00) 9,133.00
20X3 9,133.00 1,369.95 (4,000.00) 6,502.95
20X4 6,502.95 975.44 (4,000.00) 3,478.39
20X5 3,478.39 521.61 (4,000.00) 0.00

4,580.00 (16,000.00)