Progress Test 2 Revision Flashcards
Accounting treatment of lease agreement?
Dr Fixed assets cost
Cr lease creditor
Journal entry of lease payments?
Dr P+L interest costs
Dr Lease creditor
Cr Bank
Bad debt write of journal entry?
Dr bad debt expense P+L
Cr trade debtor
Provision for doubtful debts journal entry?
Dr bad debt expense P+L
Cr provision
Stock write down journal entry?
Dr P+L cost of sales
Cr stock
Provision for stock journal entry?
Dr P+L cost of sales
Cr provision for stock
Disposal of fixed asset journal entry?
Dr bank (proceeds)
Dr acc dep
Cr cost fixed asset
Cr profit on sale (dr if loss)
Capitalisation of vehicle on lease?
Dr motor vehicle cost
Cr lease creditor
Lease agreement depreciated over?
The shorter of useful life and lease term
Exceptions to leasing capitalisation
Short term leases
Low value leases
For short term and low value leases you?
Don’t capitalise asset
Don’t create lease liability
Expense charged to P+L straight line
Total / number periods = expense per period
May need accruals prepayments
Journal entry for low value lease?
Dr lease expense total/periods Cr bank (actually paid) Cr accrual (will be paid)
OR
dr lease expense
Dr prepayment (over paid than lease expense for period)
Cr bank
Value stock at
Lower of cost and NRV (value-costs to complete/sell)
Item by item basis
Issue of debenture journal entry
Dr bank
Cr debentures
Payments of interest for debentures journal entry
Dr P+L finance costs
Cr bank
