On 1 November 20X7 Kinder plc acquired under a lease a right-of-use asset which was initially measured at £140,000 (which included initial direct costs to the lessee of £4,329). Under the terms of the lease, a payment in advance of £32,000 was made on commencement of the lease, being the first of five equal annual payments made in advance each year. The right-of-use asset has a five-year useful life. The business uses the straight line method of depreciation. The lease has an implicit interest rate of 9%.
What total amount will be charged to Kinder plc’s Income Statement for the year ended 31 October 20X9 in respect of the above lease according to IFRS 16 Leases?
-£35,290
-£32,151
-£32,000
-£60,000
-£28,000
-£4,151
-£7,290
-None of the above

Answer rating: 100% (QA)

ANSWER Direct costs associated with a lease are capitalized i... View the full answer