Required Determine the carrying amount of the right of use asset after

Required determine the carrying amount of the right

This preview shows page 2 out of 2 pages.

impairment charge of RM20,000 is allocated to the right-of-use asset. Required : Determine the carrying amount of the right-of-use asset after impairment and the future depreciation charge. Example 8 Company A sells an office building to company D for cash of RM20,000,000. Immediately before the transaction, the building is carried at a cost of RM10,000,000. At the same time, A enters into a contract with D for the right to use the building for 18 years with annual payments of RM1,200,000 payable at the end of each year. The transfer of the office building qualifies as a sale under MFRS 15. The fair value of the office building on the date of sale is RM18,000,000. Since the consideration for the sale of the office building is not at fair value, A and B make adjustments to recognize the transaction at fair value. The incremental borrowing rate of the lessee is 4.5% per annum. The present value of the annual payments is RM14,592,000 of which RM2,000,000 relates to the additional financing and RM12,592,000 relates to the lease. Required : Show the journal entries at the commencement of the lease. Example 9 Company J enters into a 5 year lease for an office building with Company K. At the beginning of Year 3, J sub-leases the office building for the remaining 3 years to Company L. Required : Determine how company J would classify the lease.
Image of page 2
  • Fall '17
  • RONALDO

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes