mefielding.com 1

Fundo December 2013Mark Fielding-Pritchard

mefielding.com 2

Fundo a)

The lease is an operating lease so the rentals will be expensed in the P&L on an accruals basis

The alterations are capital and will be capitalised and depreciated over their useful life

The restoration costs will be added to the cost of their asset at their present value, $5m. This will be depreciated

Dr Leasehold Improvements $12m Cr Cash $7m, restoration Provision $5m

The provision of $5m will be increased by 8% annually until expiry of the lease

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Fundo b)Debit Credit

1 Lease Rentals 2300 Cash 2300

2 Lease Alterations

12000 Cash 7000

Provision 5000

3 Lease Alterations Depn Exp

1500 Lease Alterations Accum Depn

1500

4 Finance Cost 400 Provision 400

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Fundo b)

Statement of Profit & Loss Lease rental

2300 Depreciation

1500 Finance cost

400

Statement of Financial Position Lease Alterations

12000 Accumulated Depn

(1500)

Non Current Liability Lease provision

5400