Page 401 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx
P. 401
Answers
Example 6.2
Total lease payments = $7,500 + $12,500 = $20,000.
Length of lease = two years
Annual charge to statement of profit or loss = $20,000/2 = $10,000
Statement of profit or loss (extract)
Year 1 Year 2
Operating lease expense 10,000 10,000
Statement of financial position (extract)
Year 1 Year 2
Accruals 2,500 0
Workings
By the end of year one, a total of $10,000 has been charged to the statement of
profit or loss but only $7,500 has been paid. An accrued expense is required in
the statement of financial position of $2,500.
In year 2, $12,500 is paid in cash but only $10,000 charged as an expense. As
a result, the accrual reverses to nil.
393
