Question

GAMA Company apply IAS17 and prepare accounts to 31/3 each year. on 1/4/2016, the company acquired an asset by means of finance lease. Its fair value of the asset on this date was 50000 and the company was required to make six half-yearly lease payments of $10000 each. The first payment was payable on 1/4/2017 (in advance). the rate of interest implicit in the lease was 8% per half-year.

Requirement:

Prepare a table showing how the finance charge in this lease would be allocated to each of half-year to 2017, 2018 and 2019 using the actuarial method.