Level 4 aat leases IFRS 16

Bubblechuk
Bubblechuk Registered Posts: 1 New contributor 🐸
in Drafting and Interpreting Financial Statements
Hello!

I am currently self studying level 4 and I’m grasping it really well so far…

Until I got to leases…

I’m using BPP to study and their examples show lease liability broken down into NCL & CL and not recognised solely as a NCL.

My question is, why is it broken down into these subcategories?

Example:
Y1
10,000 (PVFLP)
920 (Interest rate Implicit)
(2000) (Payment)
=8920

Y2
8920
821
(2000)
=7741

8920 - 7741 = 1179 (current liability)

Working out Y3 onwards, the balance in the CL account will increase. Since this liability is recognised more than 1 period, would this stay as a CL?

Comments

  • shamilkaria
    shamilkaria Registered Posts: 123 Dedicated contributor 🦉
    Hi @Bubblechuk

    Not too sure of your question but based on my understanding for IFRS 16 Leases. In order to work out year 3 it would be as follows :

    £7,741 - PV
    £713 - Implicit Rate (based on 9.2%)
    (£2,000) - Yearly Payment Charge
    £6,454
    So £7,741 - £6,454 = £1,287 would be recognised in the Current Liabilities

    Are you able to confirm this is what they have in the BPP Book too?

    Many thanks

    Shamil

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