Question 1

**Section A**

TransLogistics entered into a 4-year lease for a fleet of delivery trucks on 1 January 20X5. The lease requires annual payments of $40,000 in arrears. The interest rate implicit in the lease is 6%. The present value of an ordinary annuity of $1 for 4 years at 6% is 3.465. What is the non-current lease liability to be reported on the Statement of Financial Position as at 31 December 20X5?

Accepted Answer

Create an amortization table. Initial PV = $138,600. Year 1 end balance = $106,916. Year 2 end balance = $73,331. The non-current liability at the end of Year 1 is the total balance at the end of Year 2.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Selecting the total liability at year-end instead of splitting it into current and non-current portions.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FR — Financial Reporting Practice Exam 2

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