Fac 3703

FAC3703/102/1/2012
Tutorial Letter 102/1/2012

Specific Financial Reporting
FAC3703
Semester 1
Department of Financial
Accounting
This tutorial letter contains the study material
for the topic Leases
(Study unit 6 of your study guide).
98836676
CONTENTS
1 INTRODUCTION ......................................................................................................................... ii
2 LECTURERS AND CONTACT DETAILS .................................................................................... ii
2.1 Lecturers....................................................................................................................................... ii
3 ANNEXURE A .............................................................................................................................iii
1 INTRODUCTION
Dear Student
You will receive a number of tutorial letters during the year. A tutorial letter is our way of communicating
with you about teaching, learning and assessment.
In this tutorial letter 102, you will find the study material for study unit 6 which deals with Leases. Please
make use of your available time wisely and work through this study material as soon as possible and in a
thorough manner. Learning the principles which underlie each topic in the module material is what will
ultimately lead to you achieving success in this module. This study material forms part of the examinable
material for 2012.
2 LECTURERS AND CONTACT DETAILS
2.1 Lecturers
Office number
L Botha (Ms) AJH 2-65
F Aboo (Ms) AJH 2-68
R van der Westhuizen (Ms) AJH 2-66
B Khanyeza (Mr) AJH 2-64
A Steyn (Mr) AJH 2-70
T Sekhaulela (Ms)(Secretary/Administration officer) AJH 2-42
Please use the following telephone number for all FAC3703 telephonic enquiries: (012) 429 4246
(This telephone number is a course specific number and will be answered by the above-mentioned
lecturers. The telephone circle is set up to transfer a call to the next lecturer in the circle should the first
lecturer in the circle be busy with a call.
Please make use of the following module specific (FAC3703) email address to ensure a prompt reply:
Semester 1 [email protected]
Semester 2 [email protected]
ii
FAC3703/102/1/2012
ANNEXURE A
STUDY MATERIAL: STUDY UNIT 6 - LEASES
Annexure A is to be included under study unit 6 of your study guide. Please ignore its reference to study
unit 4, as it needs to replace study unit 6 in your study guide.
IAS 17 is currently being reviewed by the IASB (International Accounting Standards Board). At the time of
compiling the study guide, the final revised IAS 17 has not yet been released and it was anticipated that it
would have been released by the end of 2011.
Subsequently, the Exposure Draft (ED 288) has been withdrawn and the revised IAS 17 is therefore not yet
available.
Please note the following as it relates to the attached study unit:
When calculating the equalisation of lease payments for operating lease payments, a lease prepayment or
provision for lease payments is normally recognised. This item must not be shown as a financial asset or a
financial liability at amortised cost in the statement of financial position, but rather as a separate line item in
the statement of financial position as 'lease prepayments or an accrued lease expenses.
The initial direct costs such as legal fees, commission paid etc. are amortised over the lease term in an
operating lease. These items must not be shown as financial assets at amortised cost in the statement of
financial position sheet but rather as a separate line item 'deferred expenses' or 'prepaid expenses' in the
statement of financial position.
The portion of the profit that is deferred in the sale and lease back finance or operating lease must not be
shown as a financial liability at amortised cost in the statement of financial position but as a separate line
item in the statement of financial position as 'deferred profit or deferred income.
More specifically:
Solution 12
Other financial liabilities in the Statement of Financial Position should read Deferred income and the
number of the note should read 7.
The number of the note referring to Deferred tax should read 8.
Solutions 17 to 20
Change all the notes with the heading Financial Liabilities as follows:
1. The heading should be Deferred income.

2. Delete the paragraphs referring to categories of financial liabilities
3. Start the notes as follows:
Included in deferred income is deferred profit resulting from the following sale and leaseback
agreement:
iii
Solutions 17 to 20
Change all notes with the heading Financial assets to Deferred expenses and change the note as
follows:
1. Delete the paragraphs referring to categories of financial assets

2. Start the notes as follows:
Included in deferred expenses is the following deferred legal expenses or deferred commission paid or
deferred loss (as the case may be) in terms of the following sale and leaseback agreement:
Solution 21
The financial liabilities measured at amortised cost under Non-current financial liabilities should be
R126 701 and under Current financial liabilities should be R74 633.
Note 6 ends after the sentence The effective interest rate is 16,08% per annum.
Insert the following after the abovementioned sentence:
7. Deferred income
Then replace the words financial liabilities measured at amortised cost in the paragraph second from the
last with deferred income. The remaining note stays the same.
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FAC3703/102/1/2012

Tutorial Letter 102/1/2012

2 LECTURERS AND CONTACT DETAILS .................................................................................... ii

2 LECTURERS AND CONTACT DETAILS

STUDY MATERIAL: STUDY UNIT 6 - LEASES

Please note the following as it relates to the attached study unit:

The number of the note referring to Deferred tax should read 8.

1. The heading should be Deferred income.

1. Delete the paragraphs referring to categories of financial assets

Insert the following after the abovementioned sentence:

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