Velvet Construction Limited is a company with a 30 June year-end and is involved in the...

 

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Velvet Construction Limited is a company with a 30 June year-end and is involved in the construction industry. The company has the following lease agreements on its books: Lease agreement 1: Construction truck Velvet Construction Limited acquired a new construction truck in terms of a lease agreement with the following terms: • Commencement date - 1 July 2021 • Sales price - R995 500, which is the same as the fair value of the construc- tion truck. • Lease period - 4 years • Payments of R185 000 are payable half-yearly in arrears, on 31 December and 30 June. • There are no guaranteed or unguaranteed residual values. Ownership passes to Velvet Construction Limited at the end of the lease agree- ment. The construction truck was available for use and put into use on 1 July 2021. Depreciation is written off at 20% per annum on cost. Prepare an extract from the Statement of Financial Position of Velvet Construction Limited for the financial year ending 30 June 2022 to show the balances relating to Lease agreement 1, including the deferred tax effect. Comparative figures and note disclosures are not required. Round all answers to the nearest Rand. (21 marks) Velvet Construction Limited is a company with a 30 June year-end and is involved in the construction industry. The company has the following lease agreements on its books: Lease agreement 1: Construction truck Velvet Construction Limited acquired a new construction truck in terms of a lease agreement with the following terms: • Commencement date - 1 July 2021 • Sales price - R995 500, which is the same as the fair value of the construc- tion truck. • Lease period - 4 years • Payments of R185 000 are payable half-yearly in arrears, on 31 December and 30 June. • There are no guaranteed or unguaranteed residual values. Ownership passes to Velvet Construction Limited at the end of the lease agree- ment. The construction truck was available for use and put into use on 1 July 2021. Depreciation is written off at 20% per annum on cost. Prepare an extract from the Statement of Financial Position of Velvet Construction Limited for the financial year ending 30 June 2022 to show the balances relating to Lease agreement 1, including the deferred tax effect. Comparative figures and note disclosures are not required. Round all answers to the nearest Rand. (21 marks)

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Statement of Financial Position V elvet Constr... View the full answer