On 1 January 2019, Time Limited entered into a four-year contract to lease a machine. The annual lease payments are 20,000, payable in arrears on 31 December each year. The interest rate implicit in the lease is 10%. There were no initial direct costs. The first lease instalment was paid on 31 December 2019.

Time Limited calculates depreciation on a straight-line basis and the machine is expected to have no residual value at the end of the lease term.

Requirement

Based upon the information provided above, prepare extracts for the financial statements of Time Limited for the year ended 31 December 2019 in accordance with IFRS 16 Leases.

Q1 What is the value of the lease liability at the inception of the lease on 1 January 2019 in accordance with IFRS 16 Leases?

Group of answer choices

20,000

63,380

49,380

80,000

Q2

What is value of the current lease liability on 31 December 2019 in accordance with IFRS 16 Leases?

Group of answer choices

34,690

18,180

49,718

15,028

Q3

What is the total value of the lease liability on 31 December 2019 in accordance with IFRS 16 Leases?

Group of answer choices

60,000

80,000

69,718

49,718