1. Leases
IAS 17

2. Quick Quiz
Quiz

3. Basically Finance Lease is
Transfers substantially all the risks and rewards incidental to ownership of an asset.
Title may or may not eventually be transferred.

4. Basically Operating lease is
A lease other than a finance lease

5. Question
Elliott and Elliot pg 483 q 1
Parts A and C only

6. Solution Statement of Financial Position Layout
Assets
Cost of leased asset
Depreciation for year
Liabilities
Present value of future payments

7. Solution Statement Income Layout
Interest on leasing obligation
Depreciation on leased asset
Liability at year end

8. Solution Answer Assets Liabilities Cost of leased asset
Depreciation for year (350,000/6)
Liabilities
Present value of future payments
Either (80, , , , ,989) or
(350,000+52,500-92,500)
350,000
58,333
291,667
310,000

9. Solution Statement Income Layout
Interest on leasing obligation
 (£350,000 x 15%)
Depreciation on leased asset
Liability at year end
52,500
58,333
110,833

10. Question
Question 4 Elliott & Elliott
Page 485
No 4

11. Headings for workings
Period Liability Rental Liability Finance Liability
at start payment during charge at end
of period period (4.3535%) of period

12. Headings 2 Statement of comprehensive income
Finance Depreciation Total
charge

13. Headings 3 statement of financial position Assets Liabilities
Equipment
Depreciation
 Liabilities
Within 2–5 years
Within 1 year

14. For next week
Questions