Exam (elaborations)
FAC3703 ASSIGNMENT 1 SEMESTER 2 OF 2022
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- University Of South Africa (Unisa)
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FAC3703 ASSIGNMENT 1 – SEMESTER 2 OF2022
(a) Extract of the Notes to the Financial Statements of Plastics Galore Ltd as at 31
July 2022
1. Leases
1.1. Right of use asset
2022
Machinery
R
Carrying amount at beginning of year -
Additions (𝐶3) 1 599 311
Depreciation for the year (𝐶5) (266 552)
Carrying amount at end of year 1 332 759
1.2. Maturity analysis of the future lease payments outstanding at the
reporting date
R
Future lease payments (undiscounted)
- For the year ended 31 July 2023 (250 062 * 2) 500 124
- For the year ended 31 July 2024 (250 062 * 2) 500 124
- For the year ended 31 July 2025 [(250 062 * 2) + 40 000] 540 124
Total future lease payments 1 540 372
Total future finance cost (𝐶4) (276 586)
Lease liability 1 263 786
Short – term portion presented under current liabilities (𝐶4) 362 502
Long – term portion presented under non – current liabilities (𝐶4) 901 285
FOR ACCADEMIC NEEDS CONTAC INFO@UNITUTORIALS.CO.ZA/0651609781
, 1.3. Total cash outflows relating to leases
R
Presented under financing activities
Cash payments for principal portion of lease liabilities (𝐶4) 323 524
Presented under operating activities
Cash payment for commission 12 000
Cash payments for interest portion of lease liabilities (𝐶4) 176 600
Total cash outflows relating to leases 512 124
Calculations
C1. Calculation of interest rate implicit in the lease
𝑃𝑉 = 1 590 000 + 10 000 = 1 600 000
𝑃𝑀𝑇 = 250 062
𝐹𝑉 = 40 000 + 20 000 = −60 000
𝑛 =4*2=8
𝐶𝑜𝑚𝑝 i = 5.85259% 𝑏i 𝑎𝑛𝑛𝑢𝑎𝑙𝑙𝑦 = 11.70517%
C2 Calculate the PV of the lease liability
𝑃𝑀𝑇 = 250 062
𝐹𝑉 = 40 000
𝑛 =4*2=8
i = 5.85259
𝑃𝑉 = 𝑅1 587 311
C3. Calculate right of use asset value
R
Initial measurement of lease liability 1 587 311
Initial direct costs of the lessee 12 000
1 599 311
C4. Amortisation Table
Interest @
Date Instalment Capital 11.70517% Balance
1 August 2021 1,587,311
31 January 2022 250,062 157,163 92,899 1,430,148
31 July 2022 250,062 166,361 83,701 1,263,786
FOR ACCADEMIC NEEDS CONTAC INFO@UNITUTORIALS.CO.ZA/0651609781
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