IFRS 16 - With Payment before Commencement date

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Yazeedovic
Posts: 2
Joined: 13 Dec 2021, 09:44

IFRS 16 - With Payment before Commencement date

Post by Yazeedovic »

Hello Everyone,

I have an accounting case that complies with IFRS 16. The details are as follow:

Total lease amount " total contract " = 6,314,550
Commencement date = 1-Nov-2021
lease term " Months " = 37
incremental borrowing rate = 3%
Interbank Rate = 0.9357%
incremental borrowing rate with interbank rate = 3.94%

Before the commencement date we paid = 2,104,850.

The installment schedule is as follows:

Up-Front Fees " Paid " = 2,104,850
1-Dec-22= 1,148,100
1-Jun-23= 956,750
1-Dec-23= 1,148,100
1-Jun-24= 956,750
Total = 6,314,550

The First Journal entry was :

31-Oct-2021. Dr. Advances to suppliers 2,104,850. Cr. Cash 2,104,850.

2nd Journal Entry:

1-Nov-2021 Dr. ROU 6,031,453.00 Cr. Advances to Suppliers 2,104,850. Cr. Capital Lease obligations 3,926,603.00

The Right of Use Asset will be amortized over the lease term " 37 " Months. and the carrying value of the ROU will be Zero at the end of the lease agreement. (No Problem).

The problem is with the capital lease obligations and the interest Exp. in the lease liability schedule i prepared, at the last month i still have 5,696.74 as remaining balance in the capital lease liability account. Also, the amortization Exp. during the contract = 6,031,453.00 - Total contract amount (6,314,550 ) Diff = 283,097. This Diff amount should be the interest expense incurred. but my schedule is showing interest expense amounting = 288,793.74

Could you please help out with case?

Thank you.
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Marek Muc
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Re: IFRS 16 - With Payment before Commencement date

Post by Marek Muc »

are you able to pose your question without asking us to go through your specific calculations?
maybe the excel examples on this page will help you:

https://ifrscommunity.com/knowledge-bas ... of-leases/
Yazeedovic
Posts: 2
Joined: 13 Dec 2021, 09:44

Re: IFRS 16 - With Payment before Commencement date

Post by Yazeedovic »

Hi Marek, I downloaded the Template, it helped me out but not entirely. I would be grateful if you could help me out with the calculations.

Thank you.
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