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The entity applies the impairment requirements in IFRS 9 to its other interests in the
associate or joint venture that are in the scope of IFRS 9 and that do not constitute part of
the net investment.
CHAPTER 27 Lease
Page Remarks
1107 The annual lease payments are unchanged (150,000 payable at the end of 5th to 15th
year). Lessee's incremental borrowing rate at the beginning of 2020 is 12% per annum.
1112 *Note: if the sublease is treated as operating lease by the intermediate lessor, no journal
entry is to be made to derecognize the right of use asset.
1119 The journal entry on the part of the Seller-Lessee should be:
Cash 2,000,000
Rights of use asset 742,476
Gain on rights transferred 283,276
Lease liability 1,459,200
Building 1,000,000
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DEBT SECURITIES (ASSET AND LIABILITIES)
Alternative computation for the present value end of the year for interest bearing debt instrument
with unreasonable interest rate or non-interest bearing note is:
1. For Assets (e.g. investment in debt securities, loan receivable, etc.)
Present value end of the year = [(Present value beginning of the year X (1+ (effective interest
rate x months outstanding/12)) TOTAL collections - Accrued Interest]
2. For Liabilities (e.g., notes payable, loan payable, etc.)
Present value end of the year = [(Present value beginning of the year X (1+ (effective interest
rate x months outstanding/12)) TOTAL payments - Accrued Interest]
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