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On 1 January 2023, Crimmock Ltd (which prepares accounts to 31 December) enters into a four-year lease of office machinery.

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On 1 January 2023, Crimmock Ltd (which prepares accounts to 31 December) enters into a four-year lease of office machinery. The company is required to make four lease payments of £30,000 and these fall due on 1 January 2023, 2024, 2025 and 2026. The rate of interest implicit in the lease is 9% per annum.
Lease payments are made at the beginning of each year, so the finance charge for each year is calculated at 9% of (liability at the start of the year – lease payment). Explain how this lease should be accounted for by Crimmock Ltd in accordance with the requirements of IFRS16 Leases.

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According to IFRS 16 Leases Crimmock Ltd should recognize a right of use asset and a lease liability at the lease commencement date which is 1 January …View the full answer


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Related Book For  answer-question
International Financial Reporting a practical guide

International Financial Reporting a practical guide

ISBN: 9781292439426

8th Edition

Authors: Alan Melville

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Question Details
Chapter # 9
Section: EXERCISE
Problem: 3
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Question Posted: April 16, 2023 06:51:48
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