On 1 July 2021, Fox Ltd leased equipment from Terrier Ltd with a useful life of 6 years. The equipment is held in the inventory of Terrier at a cost of $115,000. The details of the lease contract are as follows:

Amount	Details
5 years	Duration of lease
$30,000	5 annual payments starting on 30 June 2022
$15,000	Guaranteed residual value
	The lease is non-cancellable
10%	The interest rate implicit in the lease.
$123,035	Fair value of the equipment

Required:

Please fill in the blanks. Any present value calculations MUST be done using the present value Tables 1 and 2 from the Issues textbook. Round to whole numbers.

Identify which of the following statements about the lease in the context of AASB 16 Leases is NOT CORRECT by entering the letter of the incorrect statement. ______________ (Type in your selected answer: A, B, C or D)

A. The present value of the lease payments amounts to substantially all of the fair value of the equipment.

B. Terrier Ltd would recognise a profit on the sale of the equipment equal to $8,035.

C. The income recognised by Terrier Ltd in relation to the lease includes sales revenue at the time the lease commences and finance income over the lease term.

D. Terrier Ltd would recognise a profit on the sale of the equipment equal to $35,000.

The present value of the lease payments is equal to $ _____________ (please fill in the blank).

What is the interest income recognised by Terrier Ltd on 30 June 2022? Please fill in the blank $ ______________________

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(a) PQR Bhd is a listed diversified retail company. Its stores are located mainly in the Penang. It has three main types of stores: general department stores, beverage stores and specialist toy stores. Each of these stores has different products, customer types and distribution processes. In accordance with MFRS 8, Company PQR has identified three operating segments: general department stores, beverage stores and specialist toy stores. All three business units earn most of their revenue from external customers. Total consolidated revenue of company PQR is RM600million. Revenue Segment result (profit) Assets General department stores stores RM million 400 15 Beverage 900 RM million 100 7 200 Toystores RM million 50 4 100 All segments RM million 550 26 1 200 Required i. Identify Company PQR's reportable segments in accordance with MFRS 8. Explain your answer. ii. Analyze the relative profitability of the reportable segments. (15 marks) (b) On 1 July 2021, PQR Bhd initiates to plan to sell its beverage store to foreign party. The sale requires regulatory approval which could extend the period required to complete the sale beyond one year. Actions necessary to obtain the approvals from various regulatory authorities can only be initiated after a buyer has been identified and the firm purchase commitment is obtained. PQR Bhd expects that the purchase commitment will be obtained within one year. Required Explain whether the criteria for classification as non-current assets held for sale are met. (5 marks) (a) PQR Bhd is a listed diversified retail company. Its stores are located mainly in the Penang. It has three main types of stores: general department stores, beverage stores and specialist toy stores. Each of these stores has different products, customer types and distribution processes. In accordance with MFRS 8, Company PQR has identified three operating segments: general department stores, beverage stores and specialist toy stores. All three business units earn most of their revenue from external customers. Total consolidated revenue of company PQR is RM600million. Revenue Segment result (profit) Assets General department stores stores RM million 400 15 Beverage 900 RM million 100 7 200 Toystores RM million 50 4 100 All segments RM million 550 26 1 200 Required i. Identify Company PQR's reportable segments in accordance with MFRS 8. Explain your answer. ii. Analyze the relative profitability of the reportable segments. (15 marks) (b) On 1 July 2021, PQR Bhd initiates to plan to sell its beverage store to foreign party. The sale requires regulatory approval which could extend the period required to complete the sale beyond one year. Actions necessary to obtain the approvals from various regulatory authorities can only be initiated after a buyer has been identified and the firm purchase commitment is obtained. PQR Bhd expects that the purchase commitment will be obtained within one year. Required Explain whether the criteria for classification as non-current assets held for sale are met. (5 marks)

Answer rating: 100% (QA)

A The present value of the lease payments does not amount to subs... View the full answer