Task 3 Another assistant has been preparing the financial statements of Hapnot plc for the year...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Task 3 Another assistant has been preparing the financial statements of Hapnot plc for the year ended 31 December 20X3 and needs your advice. The financial statements are done except for one transaction which the assistant has not seen before. Hapnot plc entered into a lease for a machine on 1 January 20X3 and the assistant needs help with this. The lease details are as follows: Length of lease Annual payments Present value of minimum lease payments £12,637 Deposit paid 1 January 20X3 £1,763 Interest rate implicit in the lease Useful life of the asset 5 years £3,000 payable in arrears 6% 6 years The company incurred installation costs of £660. Requirement a) Prepare the relevant Statement of profit or loss extract in respect of the above lease for the year ended 31 December 20X3. 3 marks b) Prepare the Statement of financial position extract as at 31 December 20X3 with respect to the lease. You may round to the nearest whole number. Show your workings. c) IFRS 16 Leases requires that all leases are recognised on the statement of financial position, with two exceptions. State the two exceptions. 2 marks 9 marks d) Explain to the assistant, referring to the Conceptual Framework, why leased assets are recognised on the Statement of financial position even though the company does not legally own the asset. 3 marks Task 3 Another assistant has been preparing the financial statements of Hapnot plc for the year ended 31 December 20X3 and needs your advice. The financial statements are done except for one transaction which the assistant has not seen before. Hapnot plc entered into a lease for a machine on 1 January 20X3 and the assistant needs help with this. The lease details are as follows: Length of lease Annual payments Present value of minimum lease payments £12,637 Deposit paid 1 January 20X3 £1,763 Interest rate implicit in the lease Useful life of the asset 5 years £3,000 payable in arrears 6% 6 years The company incurred installation costs of £660. Requirement a) Prepare the relevant Statement of profit or loss extract in respect of the above lease for the year ended 31 December 20X3. 3 marks b) Prepare the Statement of financial position extract as at 31 December 20X3 with respect to the lease. You may round to the nearest whole number. Show your workings. c) IFRS 16 Leases requires that all leases are recognised on the statement of financial position, with two exceptions. State the two exceptions. 2 marks 9 marks d) Explain to the assistant, referring to the Conceptual Framework, why leased assets are recognised on the Statement of financial position even though the company does not legally own the asset. 3 marks
Expert Answer:
Answer rating: 100% (QA)
a Relevant Statement of profit or loss extract for the year ended 31 December 20x3 Answer Depreciation expenses Depreciation Leased Machine 3012 Finance expenses Finance charges on lease 758 Working 1 ... View the full answer
Related Book For
Auditing Assurance Services and Ethics in Australia an Integrated Approach
ISBN: 978-1442539365
9th edition
Authors: Alvin A Arens, Peter J. Best, Greg Shailer, Brenton Fiedler
Posted Date:
Students also viewed these accounting questions
-
Another assistant has been preparing the financial statements of Xorro plc for the year ended 31 December 20X3 and needs your advice. The financial statements are done except for one transaction...
-
The financial statements for Lucky Ltd for the year ended 31 December 2014 were as follows. Additional information: Dividends paid during the year $60, 000 Retained earnings al 1 January 2014:...
-
Statement of Comprehensive Income for the year ended 31 December 2010 Debit RM Credit RM Freehold land at cost 4,600,000 Building at cost 9,000,000 Plant and equipment at cost 5,800,000 Motor...
-
Matheny Inc. went public 3 years ago. The board of directors will be meeting shortly after the end of the year to decide on a dividend policy. In the past, growth has been financed primarily through...
-
Cornwell Company purchased (at a cost of $10,900) and used 2,300 pounds of materials during May. Cornwells standard cost of materials per unit produced is based on 2 pounds per unit at a cost $5 per...
-
What is the image of the unit circle in R2 under the action of the matrix in Exercise 7?
-
Which is not one of the three primary business activities? (a) Financing. (c) Advertising. (b) Operating. (d) Investing.
-
Lenny Florita, an unmarried employee, works 48 hours in the week ended January 12. His pay rate is $14 per hour, and his wages are subject to no deductions other than FICASocial Security,...
-
The adjusted trial balance of Erickson Real Estate Appraisal at June 3 0 , 2 0 2 4 , follows: ( Click the icon to view the adjusted trial balance. ) Read the requirements. a net loss. ) Requirement 2...
-
Whilst preparing its financial statements for the year to 30 June 2020, a company discovers that (owing to an accounting error) the sales figure for the year to 30 June 2019 had been understated by...
-
Consider the following. 19 5 dx 0 y'2X+1 Let u = 2x + 1. Find do. Indicate how the limits of integration should be adjusted in order to perform the integration with respect to u. (Enter your answer...
-
11 What is Company Co.'s total enterprise value calculated based on 2019E revenue and 2019E mean EV/Revenue multiple?
-
Why has the US Dollar strengthened recently? What is the "dollar smile"? What are some of the negative implications of a strong dollar? What are some of the arguments posited in the article...
-
Tell us a little about yourself: where are you from, what are your hobbies and interests, etc.? Why are you attending College? What are some of your personal, academic and professional goals? What...
-
The subject of your individual assignment is "Seven Quality Control Tools." These tools are listed here. 1. Data figures, 2. Pareto analysis, 3. Cause and effect analysis, 4. Trend analysis, 5....
-
Gopwani Inc., manufactures and distributes clay pots. Over the years due to neglect of this product, sales have decreased to approximately 20,000 units per year from a previous high of 100,000 units....
-
Forms of Business Organization Match the following organizational attributes in the left column with the organizational form in the right column. More than one organizational form may be associated wi
-
Consider the activities undertaken by a medical clinic in your area. Required 1. Do you consider a job order cost accounting system appropriate for the clinic? 2. Identify as many factors as possible...
-
Explain what is meant by 'uncertainties'. List three examples of uncertainties.
-
Distinguish between the TDR and the CUDR. How is each determined?
-
Following are the financial statements of Young Manufacturing Company Ltd and the auditor's report for the year ended 30 June 20X0. The examination was conducted by John Smith, an individual...
-
What types of bank reconciliation items require the firm to make journal entries?
-
What is the primary role of internal controls in managing a business? a. To prevent cash from being stolen b. To constrain subordinates' activities in order to prevent employees from deviating from...
-
What are the elements of a good internal control system?
Study smarter with the SolutionInn App