Question 14Pebworth Co entered into a contract to acquire the right to use an item of plant for a periodof three years from 1 April 2022. The contract meets the definition of a lease under IFRS16 Leases. The present value of the future lease payments on commencement of thelease was £15,462,000 which is also the initial carrying amount of the right-of-use asset.Pebworth Co will also make three rental payments of £6 million per annum which are dueto be paid in arrears on 31 March each year. The useful life of the plant is deemed to befive years. There is no option to buy the asset at the end of the lease term.The interest rate implicit in the lease is 8% per annum.Required:What is the total charge to profit or loss in respect of this lease at 31 March 2023?Question 15Drexler acquire an item of plant on 1 October 2021 at a cost of £500,000. It has a usefullife of five years (straight-line depreciation) and an estimated residual value of 10% of itshistorical cost or current cost as appropriate. As at 30 September 2023 the manufacturerof the plant still makes the same item of plant, and its current price is £600,000.Required:What is the correct carrying amount to be shown in the statement of financial position ofDrexler as at 30 September 2023 under historical and current cost?

To determine the total charge to profit or loss in respect of the lease at 31 March 2023, we need to…

Required: What is the total charge to profit or loss in respect of this lease at 31 March 2023? Question 15 Drexler acquire an item of plant on 1 October 2021 at a cost of £500,000. It has a useful life of five years (straight-line depreciation) and an estimated residual value of 10% of its historical cost or current cost as appropriate. As at 30 September 2023 the manufacturer of the plant still makes the same item of plant, and its current price is £600,000. Required: What is the correct carrying amount to be shown in the statement of financial position of Drexler as at 30 September 2023 under historical and current cost?

Required: What is the total charge to profit or loss in respect of this lease at 31 March 2023? Question 15 Drexler acquire an item of plant on 1 October 2021 at a cost of £500,000. It has a useful life of five years (straight-line depreciation) and an estimated residual value of 10% of its historical cost or current cost as appropriate. As at 30 September 2023 the manufacturer of the plant still makes the same item of plant, and its current price is £600,000. Required: What is the correct carrying amount to be shown in the statement of financial position of Drexler as at 30 September 2023 under historical and current cost?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

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