LEASES

Date of lease : 1 Jan 2017

Lease term: 5 years

Annual Rental : $11.5 million

First instalment : 31 Dec 2017

Present Value of minimum lease payments: $50 m

Interest rate implicit in the lease: 5%

Liability in SOFP at 31 Dec 2018 is ?

• $31,550,000

• $30,371,250

• $41,000,000

• $40,425,000

Right of use asset is measured at

• Lease liability - initial direct costs -estimated costs of dismantling +incentives received

• Lease liability + initial direct costs +estimated costs of dismantling +incentives received

• Lease liability - initial direct costs -estimated costs of dismantling +incentives received

• Lease liability + initial direct costs +estimated costs of dismantling - incentives received

During the year ended 30 September 20X4 Hamilton Ltd entered into two lease transactions:

On 1 October 20X3, a payment of $90,000 being the first of five equal annual payments in

advance of a lease for an item of plant. The lease has an implicit interest rate of 10%. On 1

October 20X3 (at the beginning of the lease) the present value of the total amount payable was

$375,300.

On 1 January 20X4, a payment of $18,000 for a one-year lease of an item of excavation

equipment. The lease does not contain an option to purchase the equipment.

What amount in total would be charged to Hamilton's statement of profit or loss for the year

ended 30 September 20X4 in respect of the above transactions?

• $108,000

• $121,590

• $117,090

• $126,090

Kohli Co entered into an eight year lease agreement on 1 July 20X4. The lease requires annual

payments of $750,000 in arrears.

The present value of the lease payments at 1 July 20X4,

discounted at a rate of 6% is $4,657,500.

Additionally, Kohli Co paid directly attributable costs

of $37,500 on 1 July 20X4.

What is the total charge to the statement of profit or loss for the year ended 30 June 20X5 in

respect of the right-of-use asset?

• $586,875

• $1,029,450

• 866,325

• 279,450

A contract is, or contains, a lease if the contract conveys the right __________ an identified asset for a period of time in exchange for consideration.

• To use

• To control the use of

• To obtain economic benefits from

• To recognise depreciation changes of

Which of the following shall a lessee recognise at the commencement date?

• A) A right-of use asset

• B) A lease liability

• C) Deferred income

• D) A and B

• E) B and C

At the commencement date, a lessee shall measure the right-of-use asset at

• Cost

• Fair value

• Present value

• Value in use

Q8

A provision for income tax for the year ended 30 September 2018 of $28 million is required.

At30 September 2019, the tax base of Kumble Ltd's net assets was $10 million less than their

carrying amounts. This excludes the effects of the revaluation of the property. The income tax

rate of is 30%.

increase in Revaluation surplus = $6,000

Deferred tax as at 1 October 2017 is $2.7 million.

what is the journal entry for the provision for tax and deferred taxation?

XYZ Ltd issued $5m 6% convertible loan notes on 1 July 2017. Interest is payable annually in arrears of $300,000

These bonds can be converted into one share for every $2 on 30 June 2019.

Similar loan notes, without conversion rights, incur interest at 8%.

Relevant discount rates are as follows:

Present value of $1 in:

6% 8%

1 year 0.943 0.926

2 years 0.890 0.857

What is the debt and equity component?

What is the finance cost for year 1?