Page 432 - F2 Integrated Workbook STUDENT 2019
P. 432
Chapter 19
Example 6.2 continued
Double entry (in $000)
Dr Right-of-use asset 4,589
Cr Lease liability 3,974
Cr Cash 550
Cr Restoration provision 65 (per IAS 37)
Subsequent treatment 31 December 20X1
(W3) Lease liability – Add interest and subtract lease repayment
Year Opening Payment Sub-total Interest @ 13% Closing
$000 $000 $000 $000 $000
1 3,974 (1,000) 2,974 387 3,361
2 3,361 (1,000) 2,361 307 2,668
Current liability= $3,361k – $2,361k = $1,000k
Non-current liability= $2,361k
(W4) Right-of-use asset – depreciate over shorter of lease term or useful
lifetime.
Depreciate over 5 years as both the lease term and the useful lifetime are the
same.
4,589k/5 = $918k
Dr Depreciation expense $918k
Cr Right-of-use asset $918k
Carrying amount of the right-of-use asset is $4,589k – $918k = $3,671k
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