Page 402 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx
P. 402
Chapter 20
Example 6.3
Record disposal of PPE and defer gain or loss on disposal
Dr Cash 600k
Cr PPE 400k
Cr Deferred income 200k
Release deferred income over lease term
Dr Deferred income 40k (200k/5)
Cr P/L 40k
Record finance lease as normal
– Capitalise asset
Dr PPE 520k
Cr Finance lease liability 520k
– Depreciate over lower of lease term or UEL ( 5 years)
Dr Depreciation expense 104k (520/5)
Cr PPE 104k
– Record finance cost
Dr Finance cost (p/l) 140k (520k × 27%)
Cr Finance lease liability 140k
– Record lease payment
Dr Finance lease liability 200k
Cr Cash 200k
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