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ACCA Applied Knowledge · Financial Accounting · Statement of cash flows (excluding partnerships)

Kiln Co's lease liability was $90,000 at 1 January and $70,000 at 31 December. During the year it entered a new lease, recognising a liability of $30,000 (non-cash). Interest of $6,000 accrued on the liability is included in the closing balance and is presented separately as interest paid. Total payments made in the year were $56,000, of which $6,000 was interest. What is the financing cash outflow for lease capital repayments?

The financing outflow is $50,000. Total lease payments were $56,000, of which $6,000 was interest reported separately, leaving $50,000 as capital repaid. This reconciles: opening 90,000 plus new lease 30,000 plus interest 6,000 less payments 56,000 gives 70,000.

  1. A$20,000
  2. B$50,000Correct
  3. C$56,000
  4. D$44,000

Explanation

Payments of $56,000 include $6,000 interest shown separately, so the capital repayment is $50,000. Check: 90,000 + 30,000 new + 6,000 interest - 56,000 paid = 70,000, which agrees to the closing balance.

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