,STATEMENTS
Statement of Financial Position as at 31 December 20.3
20.3 20.2
Notes R R
ASSETS
Non-current assets
Property, plant and equipment: Right-of-use assets 3 CA CA
Deferred taxation 4 - If a deferred tax asset
EQUITY AND LIABILITIES
Non-current liability
Lease liability 3 Balance at the next year (balance at the next
end year end from HP calc)
Deferred taxation 4 If deferred tax liability (we -
owe tax)
Current liability
Short-term lease liability 3 balance at current year end (balance at current year
– balance at next year end) end – balance at next
(this the SHORT term year end)
portion) (this the SHORT term
portion)
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policy
Finance costs
Finance costs are written-off over the duration of the contract according to the effective interest rate method.
Fixed assets: Right-of-use asset
Equipment is shown at carrying amount and is written-off over the useful life thereof according to the straight-line
method. The useful life of the machine is five years.
,3.Leases
Right-of-use assets - reconciliation of carrying value:
2003 year 2002 year
Opening balance (CA) 212 500 -
Additions (PV + deposit/ prepayment) - 250 000
(remember if paid in advance you have to add the first payment to the PV)
(PV of the beg function)
Depreciation (50 000) (37 500)
Closing balance (CA at year end ) 162 500 212 500
Maturity analysis of lease payments to be paid at reporting date
future lease payments (undiscounted)
(number of payments x pmt amount) for that
for 2003 specific year
for 2004
for 2005
for 2006
(so list 5 years of payments and if there are any
more add them all together in the remaining years
remaining years (+ GRV + URV) part
TOTAL FUTURE LEASE PAYMENTS (x +y)
Total future finance costs (X)
(remaining interest so if you have 16 interest payments and you’ve made 3 then the
remaining interest is 4 input 16 amort interest)
(so basically : if there are 4 payments in your term and after year 1 the remaining
finance cost 2 input 4 amort interest (so you want next pmt interest until the term is
finished
Lease liability : Y (balance @ year end)
Long term portion (of future (so basically you don’t want the next year you want the following year so you are in
years) year 1, thus you don’t want year 2 , you want 3 input 4 amort principle )
(NB if there is RV :
Lets say that the last payment is If there are 16 payments and 4 payments have already gone then the LONG term
payment 8 and there IS a RV then the potion 8 input 16
long term portion will be calculate as
follows:
For payment in arrears:
3 input 8 principle
Same scenario as for short term portion there are 2 ways to work out on HP calc
+ 8 input 8 balance (RV)
1) Remaining portion 6 input 9 amort principle = answer
2) OR 3 input 5 amort balance = answer
Short term portion (of the next So basically you just want the principle amount for the next year only so you’re in year
year) 1 currently thus 2 input 2 amort principle
If the next year has 4 payments and 3 have already gone then this will be 4 input 7
amort PRINCIPLE
, For amounts payable in advance :
Lets say a term has 9 payments and 2 have already gone so we need to work out the
short term portion for payment 3-5
On HP calc:
5 input 5 amort principle =x (next year payment)
PLUS the actual payment for the year (pmt)
= short term portion
The obligation relates to a lease agreement of a xx. The obligation is repayable in quarterly instalments of Rx (pmt amount)
until 31 March 20.6 at an implicit interest rate of 16% per annum compounded quarterly. (Suggested disclosure ito IFRS
16. 59(a))
Refer to note 5 for other expenses and note 6 for the finance costs relating to the lease.
Total cash flow (actual payments) (bank amounts) related to leases:
Disclosed under financing activities
Cash payment for the capital portion of the lease obligation
(this is the principle amount on the HP calculator for
that year so if in this year we are working with
payment 4 to 7
Then 4 input 7 amort principle
Gives you the amount
Disclosed under operating activities
Cash payments for the interest portion of the lease obligation Interest payments
Cash payments for low-value leases -
Total cash flow related to the lease Xx
this must be the total affect where lease liability is a
contra account to bank
So for payments in advance that 1st payment is in
relation to ROU asset NOT lease liability – so only do
payments relating to lease liability
4.Deferred taxation
Right-of-use asset CA x tax rate CA x tax rate
Lease liability () ()
Balance as per HP for the year
end x tax rate and because it is a
liability it goes in brackets
Total
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Talizamazoue. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R50,00. You're not tied to anything after your purchase.