Page 435 - F2 Integrated Workbook STUDENT 2019
P. 435
Answers
Example 6.5
Total lease payments = $75 + $125 = $200.
Length of lease = two years
Annual charge to statement of profit or loss = $200/2 = $100
Statement of profit or loss (extract)
Year 1 Year 2
Operating lease expense 100 100
Statement of financial position (extract)
Year 1 Year 2
Accruals 25 0
Workings
By the end of year one, a total of $100 has been charged to the statement of
profit or loss but only $75 has been paid. An accrued expense is required in the
statement of financial position of $25.
In year 2, $125 is paid in cash but only $100 charged as an expense. As a
result, the accrual reverses to nil.
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