Task 3 Another assistant has been preparing the financial statements of Hapnot plc for the year...

 

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Task 3 Another assistant has been preparing the financial statements of Hapnot plc for the year ended 31 December 20X3 and needs your advice. The financial statements are done except for one transaction which the assistant has not seen before. Hapnot plc entered into a lease for a machine on 1 January 20X3 and the assistant needs help with this. The lease details are as follows: Length of lease Annual payments Present value of minimum lease payments £12,637 Deposit paid 1 January 20X3 £1,763 Interest rate implicit in the lease Useful life of the asset 5 years £3,000 payable in arrears 6% 6 years The company incurred installation costs of £660. Requirement a) Prepare the relevant Statement of profit or loss extract in respect of the above lease for the year ended 31 December 20X3. 3 marks b) Prepare the Statement of financial position extract as at 31 December 20X3 with respect to the lease. You may round to the nearest whole number. Show your workings. c) IFRS 16 Leases requires that all leases are recognised on the statement of financial position, with two exceptions. State the two exceptions. 2 marks 9 marks d) Explain to the assistant, referring to the Conceptual Framework, why leased assets are recognised on the Statement of financial position even though the company does not legally own the asset. 3 marks Task 3 Another assistant has been preparing the financial statements of Hapnot plc for the year ended 31 December 20X3 and needs your advice. The financial statements are done except for one transaction which the assistant has not seen before. Hapnot plc entered into a lease for a machine on 1 January 20X3 and the assistant needs help with this. The lease details are as follows: Length of lease Annual payments Present value of minimum lease payments £12,637 Deposit paid 1 January 20X3 £1,763 Interest rate implicit in the lease Useful life of the asset 5 years £3,000 payable in arrears 6% 6 years The company incurred installation costs of £660. Requirement a) Prepare the relevant Statement of profit or loss extract in respect of the above lease for the year ended 31 December 20X3. 3 marks b) Prepare the Statement of financial position extract as at 31 December 20X3 with respect to the lease. You may round to the nearest whole number. Show your workings. c) IFRS 16 Leases requires that all leases are recognised on the statement of financial position, with two exceptions. State the two exceptions. 2 marks 9 marks d) Explain to the assistant, referring to the Conceptual Framework, why leased assets are recognised on the Statement of financial position even though the company does not legally own the asset. 3 marks

Answer rating: 100% (QA)

a Relevant Statement of profit or loss extract for the year ended 31 December 20x3 Answer Depreciation expenses Depreciation Leased Machine 3012 Finance expenses Finance charges on lease 758 Working 1 ... View the full answer