Accounting · Lease Accounting (IFRS 16)
Pebworth Co entered into a contract to lease a plant for three years starting from 1 April 20X7. The contract meets the definition of a lease under IFRS 16. The present value of future lease payments at commencement was $15,462,000 (initial carrying amount of the right-of-use asset). Pebworth Co will make three annual rental payments of $6,000,000 each, payable in arrears on 31 March each year. The useful life of the plant is equal to the lease term, with no option to purchase. The interest rate implicit in the lease is 8% per annum. Calculate the total charge to profit or loss in respect of this lease for the year ended 31 March 20X8.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1$6,390,960✓
- 2$6,000,000
- 3$5,154,000
- 4$1,236,960
Correct answer
$6,390,960
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