Assignment 3
Lecturer:
Submission Date
Requirements :

• Complete this paper using Microsoft Word only (if you use other word processing software,
  convert them to a Microsoft Word readable file before uploading it to Canvas). This should be
  saved as a .doc or .docx file and then uploaded to Canvas as ONE individual file.
• Include your full name, student ID, class: (FR L42 or L43) on the first line or header of your
  answer. The file name should be Student ID followed by full name in the same order as registered
  with SIM.
• Please backup/save your assignment and check that it is the correct file before you upload the
  answer file to Canvas.
• The assignment must be uploaded to Canvas on the correct course code: Financial
  Reporting L42 or L43. It must not be emailed to your lecturer.
  Question:
  (a) Explain the reasons for the replacement of the leases accounting standard IAS17 with IFRS
  16 Leases. (Maximum word limit: 300 words) (28 marks)
  (b) On 1 January 2023, Thomaz Ltd was incorporated with an issued share capital of £200,000.
  During the financial year 2023, the company earns gross revenues of £32,000 and incurs
  operating expenses before rental and depreciation expenses of £8,270.
  The company acquires an equipment that costs £50,040 from 1 January 2023. The equipment
  has an estimated economic useful life of 5 years with zero residual value.
  Required:
  Prepare Thomaz Ltd’s statement of comprehensive income for the year ended 31 December
  2023 and the statement of financial position as at 31 December 2023 separately for each of
  the three different scenarios:
  (i) If the company purchased the equipment outright, with a cash payment of £50,040 on 1
  January 2023. (16 marks)
  (ii) If the equipment was leased for one year only, payable at £12,000 on 1 January 2023.
  (12 marks)
  (iii) If the equipment was leased for five years, payable annually at £12,000 on 1 January every
  year with the first payment paid on 1 January 2023. (28 marks)
  (iv) For (a)(i) to (iii), show the detailed workings on how the net current assets balance is
  derived.