1. Background Information Mobi-Cell Ltd ("Mobi-Cell") is a mobile telecommunications company. It sells mobile phones, provides access to its mobile network 1, and sells voice minutes (airtime) and internet data (data) bundles. Airtime and data bundles are sold on both prepaid 2 and 12-month contracts. Mobi-Cell has begun preparations of its separate and group financial statements ahead of its 30 June 2023 year-end ("FY2023"). You have been tasked to assist in the accounting of some transactions brought to the attention of the financial reporting team. All the entities in the Mobi-Cell group have a 30 June year-end. 6. Investment in Samyung Ltd On 1 January 2019, Mobi-Cell acquired a 100\%-controlling interest in SamYung Ltd ("Samyung"), a well-known manufacturer of mobile phones. SamYung entered into the following two lease contracts during FY2023 - these two leases are independent of each other and are not related in any way. 6.1 Lease contract with Noukla (Pty) Ltd On 1 January 2023, SamYung entered into a lease contract with Noukia (Pty) Ltd ("Noukia") to lease equipment to Noukia. SamYung correctly classified this lease as an operating lease in its separate financial statements in accordance with IFRS 16 Leases. The lease contract specified that Noukia had to make lease payments every six months in arrears to SamYung on 1 July and 1 January for the lease term of three years. Payments would start on 1 July 2023 and end on 1 January 2026. However, SamYung granted Noukia an initial rent-free period of six months, and the first lease payment of R320 000 is only payable on 1 January 2024. The remaining four payments are R150 000 each. The South African Revenue Service taxes lease payments received under an operating lease at the earlier of receipt or accrual. 6.2 Lease with Pear (Pty) Ltd SamYung entered into a lease contract with Pear (Pty) Ltd ("Pear") on 1 June 2023 (the lease commencement date) for a period of three years to lease equipment from Pear. The lease contract included an extension option, whereby the lease term could be extended at the end of the lease term for a period of two years. On 1 June 2023, SamYung was certain that it will exercise the extension option. Ownership of the equipment does not transfer to SamYung at the end of the lease term. SamYung did not elect the recognition exemption applicable to "low value" lease assets. Further information related to the lease between SamYung and Pear are summarised below: Prepare the note to SamYung's FY2023 statement of financial position relating only to the deferred tax balances from its leases with: - Noukia, and Pear. - Comparatives are not required. Presentation 1. Background Information Mobi-Cell Ltd ("Mobi-Cell") is a mobile telecommunications company. It sells mobile phones, provides access to its mobile network 1, and sells voice minutes (airtime) and internet data (data) bundles. Airtime and data bundles are sold on both prepaid 2 and 12-month contracts. Mobi-Cell has begun preparations of its separate and group financial statements ahead of its 30 June 2023 year-end ("FY2023"). You have been tasked to assist in the accounting of some transactions brought to the attention of the financial reporting team. All the entities in the Mobi-Cell group have a 30 June year-end. 6. Investment in Samyung Ltd On 1 January 2019, Mobi-Cell acquired a 100\%-controlling interest in SamYung Ltd ("Samyung"), a well-known manufacturer of mobile phones. SamYung entered into the following two lease contracts during FY2023 - these two leases are independent of each other and are not related in any way. 6.1 Lease contract with Noukla (Pty) Ltd On 1 January 2023, SamYung entered into a lease contract with Noukia (Pty) Ltd ("Noukia") to lease equipment to Noukia. SamYung correctly classified this lease as an operating lease in its separate financial statements in accordance with IFRS 16 Leases. The lease contract specified that Noukia had to make lease payments every six months in arrears to SamYung on 1 July and 1 January for the lease term of three years. Payments would start on 1 July 2023 and end on 1 January 2026. However, SamYung granted Noukia an initial rent-free period of six months, and the first lease payment of R320 000 is only payable on 1 January 2024. The remaining four payments are R150 000 each. The South African Revenue Service taxes lease payments received under an operating lease at the earlier of receipt or accrual. 6.2 Lease with Pear (Pty) Ltd SamYung entered into a lease contract with Pear (Pty) Ltd ("Pear") on 1 June 2023 (the lease commencement date) for a period of three years to lease equipment from Pear. The lease contract included an extension option, whereby the lease term could be extended at the end of the lease term for a period of two years. On 1 June 2023, SamYung was certain that it will exercise the extension option. Ownership of the equipment does not transfer to SamYung at the end of the lease term. SamYung did not elect the recognition exemption applicable to "low value" lease assets. Further information related to the lease between SamYung and Pear are summarised below: Prepare the note to SamYung's FY2023 statement of financial position relating only to the deferred tax balances from its leases with: - Noukia, and Pear. - Comparatives are not required. Presentation