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FAC3703 EXAM PACK 2023
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FAC3703 EXAM PACK 2023
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FAC3703EXAM
PACK
2023
,SOLUTION 1: LEASES AND RELATED PARTIES
(a) DANCE LTD
GENERAL JOURNAL
DR CR
1 June 2018
Right of use asset (SFP) 486 000
Finance lease liability (SFP) 486 000
1 June 2018
Right of use asset (SFP) 4 500
Bank (SFP) 4 500
31 December 2018
Finance cost (P / L) 25 504
Finance lease liability (SFP) 25 504
31 December 2018
Depreciation (P / L) 57 225
Accumulated Depreciation (SFP) 57 225
(486 000 + 4 500) 7
[ ∗ ] = 57 225
5 12
Calculations
1. Interest rate implicit in the lease
𝑃𝑉 = (480 000 + 6 000) = 486 000
𝑛=4
𝐹𝑉 = 0
𝑃𝑀𝑇 = −150 000
𝒊 = ? = 𝟖. 𝟗𝟗𝟔𝟏%
, 2. Armotisation table
Date Instalment Interest (ii) Principal Balance
1 June 2018 - - - 486 000
31 December 2018 - 25 504 - 511 504
31 May 2019 150 000 18 217 106 279 379 721
31 December 2019 - 19 923 - 399 644
31 May 2020 150 000 14 233 115 840 263 881
31 December 2020 - 13 848 - 277 729
31 May 2021 150 000 9 891 126 261 137 620
31 December 2021 - 7 222 - 144 842
31 May 2022 150 000 5 158 137 620 0
i. Annual Interest
Date Interest
31 May 2019 43 721
31 May 2020 34 160
31 May 2021 23 739
31 May 2022 12 380
ii. Split of interest
Date Calculation Interest
31 December 2018 7 25 504
(43 721 ∗ )
12
31 May 2019 5 18 217
(43 721 ∗ )
12
31 December 2019 7 19 923
(34 160 ∗ )
12
31 May 2020 5 14 233
(34 160 ∗ )
12
31 December 2020 7 13 848
(23 739 ∗ )
12
31 May 2021 5 9 891
(23 739 ∗ )
12
31 December 2021 7 7 222
(12 380 ∗ )
12
31 May 2022 5 5 158
(12 380 ∗ )
12
, (b) KL COSTUMES LTD
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31
DECEMBER 2018
1. Profit before tax
Profit before tax has been determined after taking the following into account:
R
Incomes
Finance income 25 504
Expenses
Depreciation (𝑖) 58 333
Loss on disposal (𝑖𝑖) 140 000
2. Net Investment in Finance Leases
2.1. Reconciliation of net investment in finance leases
R
Opening balance -
New leases entered into 486 000
Repayments of Capital -
Finance Cost capitalised 25 504
Closing balance 511 4
2.2. Maturity analysis of future finance lease instalments receivable at reporting
date
2017 2019 2020 2021 2022
Undiscounted lease payments (326 463 ∗ 2) 150 000 150 000 150 000 150 000
Unearned Finance Income (18 217) (34 160) (23 739) (12 380)
Net investment in lease 131 783 115 840 126 261 137 620
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