Question 1 B
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR
ENDED 28 FEBRUARY 2015
Revenue(13800000*100/115) 12,000,000.00
Cost of sales() (9,000,000.00)
Gross profit 3,000,000.00
Other operating income(76000-24000-12000+(14-12)*(200000) 440,000.00
Advertising (110,000.00)
Auditors remunaration(40000+8000) (48,000.00)
Depreciation(0.2* (480000-120000) +0.2*(240000-12000+15000-45000) (111,600.00)
Profit on dsisposal(170000-160000) (10,000.00)
Distribution Cost (268,000.00)
Lease expense (58,933.33)
Other operating expenses(492000-34000-12000*6-8000*2-
(346,240.00)
(180000*0.12*0.5+(180000+36000)*0.12*0.5)
Finance costs(180000*0.12*0.5+(180000+36000)*0.12*0.5 (23,760.00)
Profit before tax 1 2,463,466.67
Income tax expense -
Profit for the year 2,463,466.67
Other comprehensive income for the year
Fair value adjustment on financial assets at fair value through other comprehensive Income
Revaluation Surplus(70) -
Total comprehensive income for the year 2,463,466.67
Annual instalment on loan (180000/5) 36000
, 1.A)
Attention : Financial Manager
Re: correct accounting treatment of the lease transaction (lease of the printing machine) in the
accounting records of Sona Ltd for the year ended 28 February 2024
Discussion of accounting treatment As per IFRS 16 Leases, a lessee may elect to apply the
recognition exemption to short term leases (less than 12 months) and low-value assets (less than
$5 000). It is the policy of Acca Ltd to apply the recognition exemption to all short-term and low-
value assets. As per IFRS 16 Leases, low-value assets are accounted for on a lease-by-lease basis
Recognition When the recognition exemption is applied, the lessee will recognise the lease
payments on a low-value asset lease as an expense on: • A straight-line basis over the lease term; or
• Another systematic basis if it is more representative of the pattern of the lessee’s benefit. The
lessee will only consider the lease to be a new lease when: • There is a lease modification; or •
There is any change in lease term
Calculations
Long term loan 450000
remaining payments 6
Size of annual payment 75000
Interest on loan(6/12*(450000+75000)*0.15+6/12*450000*0.15) 73125
lease Contract
Initial paymrnt 34000
Lease payment for the first 6 months(12000*6) 72000
lease payment for the next 30 months(8000*2.5*12) 240000
