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Supplementary objective test questions
6.3 Rat Ltd enters into an operating lease on the 1st July 20X5 to lease an item of
office equipment for 3 years. The equipment has an expected useful life of 6
years and if bought outright would cost $50,000.
Rat Ltd has managed to negotiate a 'lease holiday' and will not pay the lease
rental for the first year.
The original lease agreement (without the lease holiday) stated that the annual
lease payments were to be $10,000 per annum commencing on 30th June
20X6
What will appear in the financial statements of Rat Ltd for the year ended
30th June 20X6?
Statement of profit or loss expense Statement of financial position
A 6,667 10,000 prepayment
B 10,000 10,000 accrual
C 6,667 6,667 accrual
D 0 0
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