FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Concept explainers

Leasing
Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.
Question

During the year ended 30 September 2021 Hanlon Plc entered into two lease transactions.
On 1 October 2020 Hanlon made a payment of £90,000 being the first of five equal annual 
payments under a lease for an item of plant. The lease has an implicit interest rate of 10% and 
the present value of the total lease payments on 1 October 2020 was £340,000
On 1 January 2021, Hanlon made a payment of £18,000 for a one-year lease of an item of 
equipment.
What amount in total would be charged to Hanlon Plc’s statement of profit or loss for the year 
ended 30 September 2021 in respect of the above transactions. Show your calculations

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