Module 9 Flashcards

1
Q

Receipt of loan journal entry

A

Dr bank

Cr loan creditor

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2
Q

Interest expense on loan journal entry

A

Dr P+L interest costs

Cr Bank

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3
Q

Repayment of loan capital journal entry?

A

Dr loan creditor

Cr bank

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4
Q

Loan repayment separated into capital and interest elements journal entry?

A

Dr P+L interest costs
Dr Loan creditor (capital repayment)
Cr Bank

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5
Q

Accrual of interest costs journal entry?

A

Dr P+L interest costs
Cr Accruals

Don’t accrue capital payments as loan already liability
If loan interest not been paid at year end

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6
Q

Accounting for leases

A

Treated as though asset belongs to the business - fixed asset at cost

Right of use asset

Have an agreed lease term

Assume payments made in arrears

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7
Q

Recognition of right of use asset and associated lease creditor journal entry?

A

Dr Fixed assets- cost

Cr lease creditor

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8
Q

Lease payments separated into capital and interest elements journal entry?

A

Dr P+L interest costs
Dr lease creditor
Cr bank

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9
Q

How to calculate lease creditor balances?

A

Opening + interest - payment = closing

Break closing down into current and non current

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10
Q

Depreciation of lease assets?

A

Over the shorter of its tearful life and lease term

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11
Q

Other types of leases?

A

Short term - 12 months or less

Low-value

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12
Q

Accounting for short term and low value leases?

A

Charged to P+L on a straight line basis over term of lease

NO liability
DONT capitalise

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13
Q

Basis calculation of lease expense for short term and low value

A

Total lease payments/number of periods = expense per period

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14
Q

Journal entries to account for lease

A

Dr P+L lease expense
Cr bank
Cr accrual (or dr prepayment)

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15
Q

Subsequent years of leases with accruals or prepayments?

A

Not reversed

Difference between rent amount and cash paid will be better off against brought forward accrual or prepayment

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