You have the following information about a lease agreement: Nero Ltd is the lessee. 5-year lease contract from 1 January 2022. The asset was new on 1 January 2022 (cost of 10m to the Lessor). Annual lease payment is 2.5m on 31 Dec. Asset has a five-year useful life and a Nil residual value. Nero's accounts are made up to 31 December each year. If Nero takes a loan of 10 for five years, the incremental borrowing rate is 10%. If Nero followed IFRS 16, the value of the non-current liability that should appear in the balance sheet on 31 Dec 2022 should be?

 

Answer rating: 100% (QA)

To calculate the noncurrent liability under IFRS 16 we need to determine the present value of lease ... View the full answer