Page 501 - F2 Integrated Workbook STUDENT 2019

Supplementary objective test questions

The following information is relevant for the next 2 questions

Bunny plc has 2 options for the purchase of a new machine with an estimated useful
life of 6 years. It can buy it today, the 1st January 20X3, at a cash price of $100,000
or it can lease the asset under the following agreement:

 A deposit of $13,760 will be payable straight away

 5 annual payments of $20,000 will be due, beginning on 1st Jan 20X3

 The interest rate implicit in the lease is 8%

 At the end of the lease term, Bunny returns the asset to the lessor.

6.2 If Bunny decides to lease the asset, what will be recorded in its financial
statements at the y/e 31 December 20X4 for the following figures?

Finance cost Non-current liability Current liability

A 4,123 35,662 20,000

B 5,299 51,539 20,000

C 5,312 51,712 20,000

D 5,851 43,709 15,281

6.3 The right-of-use asset will have a carrying amount as at 31 December 20X5 of:

A 26,496

B 40,000

C 60,000

D 66,240

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