Problem
ABC Ltd is considering a lease. The lease will be for 3 years, commencing on 1 Jul 22 and interest rate implicit is 5%.
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Annual lease payments
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360k
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Payable in arrears
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Yes, on 30 Jun each year
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Lease conditions
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Rent-free first 12 months (no annual payment on 30 Jun 23)
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Explain the accounting treatment for the lease, referencing specific relevant parts of IFRS 16 (Leases), and show all workings to calculate the amounts to be recognised in Year 1 of the lease.