Page 502 - F2 Integrated Workbook STUDENT 2019
P. 502
F2: Advanced Financial Reporting
6.4 Rat Ltd enters into a lease on the 1st July 20X5 to lease mobile phones for 3
years. The equipment has an expected useful life of 6 years and if bought
outright would cost $5,000. This is deemed to be of low value to Rat Ltd.
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 $1,000 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 667 1,000 prepayment
B 1000 1,000 accrual
C 667 667 accrual
D 0 0
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