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You are a financial accountant working at Knappa Foods Limited ( Knappa ) . Knappa is a manufacturer and retailer of food products. It has
You are a financial accountant working at Knappa Foods Limited Knappa Knappa is a manufacturer and retailer of food products. It has two manufacturing facilities in Australia one in Gosford, New South Wales, and one in Ballarat, Victoria.
You are currently working on several tasks relating to preparing Knappas financial statements for the year ended June You have identified the following issues for consideration see photo attached
a For the year ended June prepare the journal entries to account for items Show all workings. Ignore the impact of tax.
b In relation to Item assume that the terms of the lease agreement impose an annual additional lease payment on Knappa based on of Knapp's sales revenue earned from the shop. At the commencemen of the lease, Knappa's budget forecast for the shop's sale revenue is as follows:
Year ending Budgeted sales revenue
June $
June $
June $
June $
June $
Explain how the additional lease payments would be accounted for and the impact, if any, on the measurement of the lease liability at initial recognition. Refer to appropriate IFRS & IAS accounting standards.
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