Mathematics · Financial Accounting
On 1 January 20X6, Fellini Co entered into a contract for the right to use a machine for a four year period. The contract meets the definition of a lease under IFRS 16 Leases. Fellini Co paid a deposit of $700,000 on the commencement of the lease on 1 January 20X6 and a further 3 instalments of $700,000 are payable annually in advance. The present value of the future lease payments was $1,871,100 on commencement of the lease. The interest rate implicit in the lease is 6%. What amount will appear under non-current liabilities in respect of this lease in the statement of financial position of Fellini Co at 31 December 20X6?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1$1,871,100
- 2$1,283,366✓
- 3$1,983,366
- 4$700,000
Correct answer
$1,283,366
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