Accrual Basis Cash Basis

SPL Cash Flow

Revenue 360,000 SPL + SOFP
COS = inv1 + purch - inv2 (215,000) Operating Activity - Indirect Method
Gross Profit 145,000 Earnings Before Tax
Investment Income 10,000 + Depreciation Exp
*1 Loss on NCA Disposal (30,000) - Profit on NCA Disposal
*2 Profit on NCA Disposal 40,000 + Loss on NCA Disposal
Interest Exenses (12,000) + Interest Expenses
Depreciation Exp (22,000) - Investment Income
EBT 131,000 ** CFFOABWCC
Tax Expenses (13,000) Receivable
NP 118,000 Inventory
Payable
*1 CV = 95.000, Proceeds 65.000 CFFOAAWCC
*2 CV = 135.000, Proceeds 175.000 - Tax Paid
Net Oper. Activity

Main Rules!
* 1 Cash Basis = Accrual Basis Transaction + SOFP Balance 1 - SOFP Balance 2

Assets <> Cash Indirect Proportion

*2
Liabilities <> Cash Direct Proportion

3 "Cash" in "IAS 7 Cash Flow"

"Cash" = Cash + Short Term Investment - Bank Overdraft

*Cash Equivalents:
Cash & Short Term Investment & Bank Overdraft
Short Term Investment - Maturity date at acquisition up to three months

CFFOABWCC Cash Flow From Operating Activity Before Working Capital Change
CFFOAAWCC Cash Flow From Operating Activity After Working Capital Change
Purchases
Payable 1
Payable 2
Payment

CASH Flow

Cash Received From Customers

Cash Flow
SPL + SOFP
ctivity - Indirect Method Investing Activity
131,000 + NCA Proceeds 175,000
22,000 + NCA Proceeds 65,000
(40,000) + Investment Income 10,000
30,000 Net Invest. Activity 250,000
12000
(10,000)
145,000 Financing Activity
0 - Interest Exenses Paid (12,000)
0 Net Finance Activity (12,000)
0
145,000 Net Cash Flow 370,000
(13,000) Opening "Cash" X
132,000 Closing "Cash" X + 370.000

(Both > Assets and Liabilites)

ng Capital Change
g Capital Change
 17
5
1
21

= SPL + SOFP

From Customers Sales

Cash Receivables 1
Credit Receivables 2

Advance 1
Advance 2
 Main Calculations!

1 Cash Basis Transaction = Accrual Basis Transaction + SOFP Balance 1 - SOFP Balance 2

Example:
Tax Expenses 15,000 SPL
Tax Payable 1 7,000 SOFP
Tax Payable 2 2,000 SOFP
Payment 20,000 Cash Flow

2 Depreciation Expenses = Accumlated Depreciation 2 - Accumlated Depreciation 1 + Accumlated Depreciation

*source Accumlated Depreciation 2 = Accumlated Depreciation 1 - Accumlated Depreciation of Disposed Assets + Dep

Example:
Accum. Depr 1 42,000
Acc. Dep Disposed NCA 7,000 35000
Accum. Depr 2 54,000
Depreciation Expenses = 19,000

3 Acqusition Amount = NCA Cost 2 - NCA Cost 1 + Disposed NCA Cost - Revaluation Increase
*source NCA COST 2 = NCA COST 1 - Disposed NCA Cost + Revaluation Increase + Acqusition Amount

NCA, Cost 1 110,000

Disposed Assets Cost 15,000 95000
Revaluation Increase 10,000 105000
Acqusition 35,000
NCA, Cost 2 140,000

4 Acquisition Amount = NCA, Carrying Value 2 - NCA, Carrying Value 1 + NCA Carrying Value Disposed + Deprec
*source NCA, Carrying Value 2 = NCA, Carrying Value 1 - NCA Carrying Value Disposed - Depreciation Expenses + Acquis

NCA, Carrying Value 1 240,000

Disposed Assets Car Value 70,000 170,000
Depreciation Exp 20,000 150,000
Revaluation Increase 40,000 190,000
Acqusition 250,000
NCA, Carrying Value 2 440,000

5 Dividend Paid Calculation

Step 1 Dividend declared = Retained Earnings 1 + Net Profit - Retained Earnings 2
Step 2 Dividend Paid = Dividend Declared + Dividend Payable 1 - Dividend Payable 2

Retained Earnings 1 100,000

Net Profit 70,000
Retained Earnings (would be) 170,000
Dividend Declared 30,000
Retained Earnings 2 140,000

Dividend Payable 1 5000

Dividend Payable 2 10,000
Dividend Paid 25,000
 Balance 2

ation 1 + Accumlated Depreciation of Disposed Assets

reciation of Disposed Assets + Depreciation Expenses

uation Increase
qusition Amount

NCA COST Increase Amount:

1) Acqusition
2) Revaluation Increase

NCA COST Decrease Amount:

1) Disposed

A Carrying Value Disposed + Depreciation Expenses - Revaluation increase amount

ed - Depreciation Expenses + Acquisition Amount + Revaluation increase amount

NCA Carrying Value Increase Amount:

1) Acqusition
2) Revaluation Increase

NCA Carrying Value Decrease Amount:

1) Disposed
2) Depreciation Expense
Homework
19.4
19.5
19.6
19.7
Test 24
 Cash Flow Statement

Cash flows from operating actvities

Profit before tax (Statement of profit or loss)
Depreciation Expense
Interest Expense
Interest Received
Investment Income
Loss on sale of non-current assets
Profit on sale of non-current assets
Cash generated before working capital changes
(Increase)/decrease in inventories
(Increase)/decrease in receivables
Increase/(decrease) in payables
Cash generated from opera􀆟ons
Income taxes paid
Interest Paid *
Dividend Paid *
Net cash flows from operating actvities

Cash flows from investing actvities

Payments to acquire property, plant and equipment
Payments to acquire intangible non-current assets
Receipts from sales of property, plant and equipment
Receipts from sale of non-current asset investments
Interest received
Investment Income
Dividend Received
Net cash flows from investing actvities

Cash flows from financing actvities

Issue of share capital
Long-term loan
Interest Paid *
Dividend Paid *
Net cash flows from financing

Increase or Decreased in cash and cash equivalents

Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Chapter 26
Financial Ratios

SPL 2019 2020 Change

Revenue 320,000
COS (170,000)
G. Profit 150,000 47% 57% Gross Profit Margin
OPEX (30,000)
EBITDA 120,000
Deprec Exp (15,000)
ROCE 105% EBIT 105,000 33% Operating Profit Margin
Interest Exp (15,000)
EBT 90,000
Tax Exp (18,000)
ROE 240% EAT 72,000 23% Net Profit Margin

* Gross Profit Margin = GP / Revenue

* Operating Margin = EBIT / Revenue
* Net Profit Margin = NP / Revenue

SOFP
Cash 30,000 Equity 30,000

Property purchased by mortgage loan = 70000

Cash 0 NCL 70,000

Property 100,000 Equity 30,000

* Capital Employed = Equity + NCL

* Capital Employed = Total Assets - Current Liabilities
* Capital Employed = NCA + Working Capital
* Working Capital = Current Assets - Current Liabilities

ROE = Return On Equity ROE = NP / Equity

A B
NP 10,000 NP
Equity 100,000 Equity

ROE 10% ROE

 2019 2020
Sales 100 120
COS 80 85
GP 20 35

GPM 20% 29%

GPM Incr. 45.83%

 470 570

100 47% 57%

21.28%
A 21%
B 27%
C 10%
D 57%
 * EBITDA - Earnings Before Interest Expenses, Tax Expenses, Depreciation and Amortisation Expenses
* EBIT - Earnings Before Interest Expenses, Tax Expenses
* EBT - Earnings Before Tax Expenses
Profit Margin * EAT - Earnings After Tax Expenses
Earnings = Profit

ting Profit Margin

Interest Cover Ratio 7 Times
Interest Cover Ratio = EBIT / Interest Expenses

ofit Margin

* ROCE = Return on Capital Employed

* ROCE = EBIT / Capital Employed

* ROCE = 105%

Capital Employed = 100,000

Gearing 70% * NCL / Capital Employed
Liabilities Leverage 30% * Equity / Capital Employed
l
t Liabilities Assets Turnover = 3.2 Sales/Capital Employed
times

Dupont Analysis

B ROCE = Operating Profit Margin * Asset Turnover

100,000
1,000,000 EBIT Sales
ROCE = *
Sales Cap Employed
10%
 If, Sales 10% incr =?

Sales 100
COS 60

COS
Fixed Overheads 30%
Variable Overheads 70%

Sales Price X
Purchases Price Incr.

GP on Sales Margin = ?
 EBIT
ROCE =
Sales

40 AZN 400%

by 10% 4 AZN 15%

increase 21%
n and Amortisation Expenses

A B
Op Pr Mar 10% 15%
Turnover 20 17
ROCE 200% 255%
If, Sales 10% incr =?

OLD New New SPL

Fixed 18 18 110 Sales
Var 42 46.2 64.2 COS
60 64.2 45.8 GP

20%
 Sales
*
Cap Employed

0.5 200%

8 120%
Example SOFP
CA 220 CL 50
NCA 350 NCL 120
Equity 400

Total Assets 570 Total 570

1 Capital Employed = Equity + NCL 520

2 Capital Employed = Total Assets - Current Liabilities 520
3 Capital Employed = NCA + Working Capital 520

* Working Capital = Current Assets - Current Liabilities 170

 In order to assess a company’s ability to fulfill its long-term obligations, an analyst would most likely examine
A activity ratios.
B liquidity ratios.
C solvency ratios.

Which ratio would a company most likely use to measure its ability to meet short-term obligations?
A Current ratio.
B Payables turnover.
C Gross profit margin.

An analyst is interested in assessing both the efficiency and liquidity of Spherion PLC. The analyst has collecte

FY3 FY2 FY1

Days of inventory on hand 32 34 40
Receivables collection Days 28 25 23
Number of days of payables 40 35 35

Based on this data, what is the analyst least likely to conclude?

A Inventory management has contributed to improved liquidity.
B Management of payables has contributed to improved liquidity.
C Management of receivables has contributed to improved liquidity.

A creditor most likely would consider a decrease in which of the following ratios to be positive news?
A Interest coverage (times interest earned).
B Debt-to-total assets.
C Return on assets.

Which of the following is least likely a limitation of financial ratios?

A. Data on comparable firms are difficult to acquire.
B. Determining the target or comparison value for a ratio requires judgment.
C. Different accounting treatments require the analyst to adjust the data before comparing ratios.

RGB, Inc.’s purchases during the year were $100,000. The balance sheet shows an average
accounts payable balance of $12,000. RGB’s payables payment period is closest to:
A. 37 days.
B. 44 days.
C. 52 days.

1 A company’s current ratio is 1.9. If some of the accounts payable are paid off from the cash account, the:
A. numerator would decrease by a greater percentage than the denominator, resulting in a lower current ratio.
B. denominator would decrease by a greater percentage than the numerator, resulting in a higher current ratio
C. numerator and denominator would decrease proportionally, leaving the current ratio unchanged.

A company’s quick ratio is 1.2. If inventory were purchased for cash, the:
A. numerator would decrease more than the denominator, resulting in a lower quick ratio.
B. denominator would decrease more than the numerator, resulting in a higher current ratio.
C. numerator and denominator would decrease proportionally, leaving the current ratio unchanged.

All other things held constant, which of the following transactions will increase a firm’s
current ratio if the ratio is greater than one?
A. Accounts receivable are collected and the funds received are deposited in the firm’s cash account.
B. Fixed assets are purchased from the cash account.
C. Accounts payable are paid with funds from the cash account.

RGB, Inc.’s receivable turnover is ten times, the inventory turnover is five times, and the
payables turnover is nine times. RGB’s cash conversion cycle is closest to:
A. 69 days.
B. 104 days.
C. 150 days.

RGB, Inc.’s income statement shows sales of $1,000, cost of goods sold of $400, preinterest
operating expense of $300, and interest expense of $100. RGB’s interest coverage ratio is closest to:
A. 2 times.
B. 3 times.
C. 4 times.
would most likely examine:

rm obligations?

. The analyst has collected the following data for Spherion:

be positive news?

aring ratios.

he cash account, the: CA 19 CL 10 1.9

g in a lower current ratio.
 g in a higher current ratio. CA 16 CL 7 2.285714
tio unchanged.
16% 30%

CA
CL
tio unchanged.

s cash account.

atio is closest to:

 Cash Flow Statement
"000
Cash flows from operating actvities 143 Add
Profit before tax (Statement of profit or loss) 350 Add
Depreciation Expense 90 Add
Interest Expense 60 Add
Interest Received 0 ------
Investment Income 0 ------
Loss on sale of non-current assets 13 Add
Profit on sale of non-current assets (5) Subtract
Cash generated before working capital changes 508 Add
(Increase)/decrease in inventories (48) Subtract
(Increase)/decrease in receivables (75) Subtract
Increase/(decrease) in payables 8 Add
Cash generated from operations 393 Add
Income taxes paid (190) Subtract
Interest Paid * (60) Subtract
Dividend Paid * 0 ------
Net cash flows from operating actvities 143 Add

Cash flows from investing actvities (189) Subtract

Payments to acquire property, plant and equipment (201) Subtract
Payments to acquire intangible non-current assets (50) Subtract
Receipts from sales of property, plant and equipment 32 Add
Receipts from sale of non-current asset investments 30 Add
Interest received 0 ------
Investment Income 0 ------
Dividend Received 0 ------
Net cash flows from investing actvities (189) Subtract

Cash flows from financing actvities 110 Add

Issue of share capital 60 Add
Long-term loan 100 Add
Interest Paid * 0 ------
Dividend Paid * (50) Subtract
Net cash flows from financing 110 Add

Increase or Decreased in cash and cash equivalents 64 Increase

Cash and cash equivalents at beginning of period (97)
Cash and cash equivalents at end of period (33)

(1) The proceeds of the sale of non-current asset investments amounted to $30,000.
(2) Fixtures and fittings, with an original cost of $85,000 and a carrying amount of $45,000, were sold for $32,000 d
(3) The following information relates to property, plant and equipment.

31.12.20X2 31.12.20Xl
$'000 $'000
Cost/valuation 720 595
Accumulated depreciation 340 290
Carrying amount 380 305

(4) 50,000 $1 ordinary shares were issued during the year at a premium of 20c per share.

W1 - Depreciation Expenses
Depreciation Expenses = Accumlated Depreciation 2 - Accumlated Depreciation 1 + Accumlated Depreciation of D
Accumlated Depreciation 2 = Accumlated Depreciation 1 - Accumlated Depreciation of Disposed Assets + Deprecia
Depreciation Expenses 90

W2 - Tax Paid
Cash Basis Transaction = Accrual Basis Transaction + SOFP Balance 1 - SOFP Balance 2

Example:
Tax Expenses 240,000 SPL
Tax Payable 1 240,000 SOFP
Tax Payable 2 290,000 SOFP
Payment 190,000 Cash Flow

W3 - Acquisition of NCA
Acqusition Amount = NCA Cost 2 - NCA Cost 1 + Disposed NCA Cost - Revaluation Increase
NCA COST 2 = NCA COST 1 - Disposed NCA Cost + Revaluation Increase + Acqusition Amount

NCA, Cost 1 595000

Disposed Assets Cost 85000
Revaluation Increase 9000
Acqusition 201000
NCA, Cost 2 720000
 SPL
Sales revenue 2,553
Cost of sales 1,814
Gross profit 739
Distribution costs 125
Administrative expenses 204
Finance costs 60
Profit before tax 350
Income tax expense 240
Profit for the year 110

20X2 20Xl
Non-current assets 630 530
Tangible assets 380 305
Intangible assets 250 200
Investments 0 25

Current assets 592 418

Inventories 150 102
Receivables 390 315
Cash in hand 52 1

Equity and liabilities 620 491

Share capital ($1 ordinary shares) 200 150
Share premium account 160 150
Revaluation surplus 100 91
Retained earnings 160 100

Non-current liabilities
Long-term loan 100 0

Current liabilities 502 457

Trade payables 127 119
Bank overdraft 85 98
Taxation 290 240

ok

00, were sold for $32,000 during the year. (Acc. Depr - 40.000)
cumlated Depreciation of Disposed Assets
Disposed Assets + Depreciation Expenses

510000
519000
19.6 Snowdrop

1 During the year dividends paid were $270,000.

2 $700,000 for depreciation charge on non-current assets.
3 During the year non-current assets with a net book value of $200,000 were sold for $180,000.

Cash Flow Statement

"000
Cash flows from operating actvities 1492
Profit before tax (Statement of profit or loss) 1,032 Add
Depreciation Expense 700 Add
Interest Expense 10 Add
Interest Received 0 Subtract
Investment Income 0 Subtract
Loss on sale of non-current assets 20 Add
Profit on sale of non-current assets 0 ------
Cash generated before working capital changes 1762
(Increase)/decrease in inventories (80) Subtract
(Increase)/decrease in receivables (130) Subtract
Increase/(decrease) in payables 85 Add
Cash generated from operations 1637
Income taxes paid (145) Subtract
Interest Paid * 0 ------
Dividend Paid * 0 ------
Net cash flows from operating actvities 1492 Add

Cash flows from investing actvities (2620)

Payments to acquire property, plant and equipment (2800) Subtract
Payments to acquire intangible non-current assets 0 ------
Receipts from sales of property, plant and equipment 180 Add
Receipts from sale of non-current asset investments 0 ------
Interest received 0 Add
Investment Income 0 Add
Dividend Received 0 ------
Net cash flows from investing actvities (2620) Subtract

Cash flows from financing actvities 900

Issue of share capital (Right Issue) 1280 Add
Long-term loan (100) Subtract
Interest Paid * (10) Subtract
Dividend Paid * (270) Subtract
Net cash flows from financing 900 Add

Increase or Decreased in cash and cash equivalents (228) ok

Cash and cash equivalents at beginning of period 170 Opening
Cash and cash equivalents at end of period (58) Closing
W1 Tax Paid
Cash Basis Transaction = Accrual Basis Transaction + SOFP Balance 1 - SOFP Balance 2

Example:
Tax Expenses 180,000 SPL
Tax Payable 1 145,000 SOFP
Tax Payable 2 180,000 SOFP
Payment 145,000 Cash Flow

W2 Acquisition Amount = NCA, Carrying Value 2 - NCA, Carrying Value 1 + NCA Carrying Value Disposed + Deprec
*source NCA, Carrying Value 2 = NCA, Carrying Value 1 - NCA Carrying Value Disposed - Depreciation Expenses + Acquis

NCA, Carrying Value 1 2,700

Disposed Assets Car Value 200 2500
Depreciation Exp 700 1800
Revaluation Increase -
Acqusition 2,800
NCA, Carrying Value 2 4,600
180,000.

The statement of profit or loss for the year ended 31 May 20X5
$'000
Operating profit (EBIT) 1,042
Interest payable (10)
Profit before taxation 1,032
Taxation (180)
Profit for financial year 852
------
Add
Subtract STATEMENTS OF FINANCIAL POSITION AS AT 31 MAY
2005 2004
"000 "000
Non-current assets 4,600 2,700

Current assets 940 900

Inventory 580 500
Trade receivables 360 230
Bank 0 170

Total assets 5540 3600

Current liabilities 688 510

Trade payables 450 365
Taxation 180 145
Bank overdraft 58 0

Non-current liabilities
10% Loan note 0 100

Equity 4852 2990

Ordinary share capital 3500 2370
Share premium 300 150
Retained earnings 1052 470

Equity and liabilities 5540 3600

W3 - Rght issue 1280

 Share Capital 1130
Share premium 150

Value Disposed + Depreciation Expenses - Revaluation increase amount

ciation Expenses + Acquisition Amount + Revaluation increase amount
24.15 The following information is available about the plant, property and equipment of Lok Co, for the year t

Carrying amount of assets at beginning of the year $'000

Carrying amount of assets at end of the year 462
Increase in revaluation surplus during the year 633
Disposals during the year, at cost 50
Accumulated depreciation on the assets disposed of 110
Depreciation charge for the year 38 65

Based on this information, what amount will be included for purchases of property, plant and equipmen
in a statement of cash flows that complies with IAS 7 Statement of Cash Flows?
t of Lok Co, for the year to 31 December 20X3.

erty, plant and equipment for the year,

325 The figures below have been prepared for inclusion in the statement of cash flo

Tax and dividends paid

Increase in payables
Decrease in inventory
Redemption of loans
Increase in receivables
Reduction in cash and cash equivalents
Depreciation charge
Payments to acquire non-current assets
Proceeds from sale of non-current assets

What is the cash generated from operations?

Cash flows from operating actvities

EBT
Depreciation charge
Increase in receivables
Increase in payables
Decrease in inventory
Cash generated from operations
Tax and dividends paid
Net cash flows from operating actvities

Cash flows from investing actvities

Payments to acquire non-current assets
Proceeds from sale of non-current assets
Net cash flows from investing actvities

Cash flows from financing actvities

Redemption of loans
Net cash flows from financing

Increase or Decreased in cash and cash equivalents

in the statement of cash flows of Bamboo.

$87,566
$13,899
$8,900
$300,000
$6,555
$3,211
$10,600
$47,999
$13,100

0
X
$10,600
($6,555)
$13,899
$8,900
419,254
($87,566)
331,688

(34,899)
($47,999)
$13,100
(34899)

(300,000)
($300,000)
(300000)

(3,211)
 A business’s bank balance increased by $750,000 during its last financial year.
During the same period it issued shares, raising $1 million and repaid a loan of $750,000.
It purchased non-current assets for $200,000 and charged depreciation of $100,000.
Receivables and inventory increased by $575,000.

What was the profit for the year?

At the beginning A
SOFP

Cash 0 Liablity 750,000 Cash

Rec+ Inv 0 Rec+ Inv
Share Capital 0
NCA, Plant 0 Retained Earning (750,000) NCA, Plant
Equity 0

Total Assets 0 Equity + Liability 750,000 Total Assets

NP=
 A business’s bank balance increas
During the same period it issued
It purchased non-current assets fo
Receivables and inventory increas

What was the profit for the year?

At the end DR
SOFP
B/D
750,000 Liablity 0 Share Issue
575,000 Profit
Share Capital 1,000,000
100,000 Retained Earning 425,000
Equity 1,425,000

1,425,000 Equity + Liability 1,425,000

Profit

1,175,000

CB Profit
Depreciation
AB Profit
business’s bank balance increased by $750,000 during its last financial year.
ring the same period it issued shares, raising $1 million and repaid a loan of $750,000.
urchased non-current assets for $200,000 and charged depreciation of $100,000.
ceivables and inventory increased by $575,000.

hat was the profit for the year?

Cash CR

0 PMT 750,000
1,000,000 NCA 200,000
1,275,000 Rec + Inv 575,000
C/D 750,000

2,275,000 2,275,000

Cash Basis
1,275,000

Accrual Basis
1,275,000
(100,000)
1,175,000
267 The following information is available for the property, plant and equipment of Fry Co as at 30 September:

20X4 20X3
$'000 $'000
Carrying amounts 23,400 14,400

The following items were recorded during the year ended 30 September 20X4:
(i) Depreciation charge of $2.5 million
(ii) An item of plant with a carrying amount of $3 million was sold for $1.8 million
(iii) A property was revalued upwards by $2 million
(iv) Environmental provisions of $4 million relating to property, plant and equipment were capitalised during

What amount would be shown in Fry Co's statement of cash flows for purchase of property, plant and
equipment for the year ended 30 September 20X4?

A $8.5 million
B $12.5 million
C $7.3 million
D $10.5 million

Acquisition Amount = NCA, Carrying Value 2 - NCA, Carrying Value 1 + NCA Carrying Value Disposed + Dep
NCA, Carrying Value 2 = NCA, Carrying Value 1 - NCA Carrying Value Disposed - Depreciation Expenses + Acq

Carrying Value 14900 23400

ACQ Amount 8500

Co as at 30 September:

t were capitalised during the year

roperty, plant and

ng Value Disposed + Depreciation Expenses - Revaluation increase amount - Provision

reciation Expenses + Acquisition Amount + Revaluation increase amount + Provision
 269 Extracts from Deltoid Co's statements of financial position are as follows:

STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH

20X1 20X0
$'000 $'000
Non-current assets
Right-of-use asset 6,500 2,500

Non-current liabilities
Lease obligations 4,800 2,000
Current liabilities
Lease obligations 1,700 800

Total Liabilities 6,500 2,800

During the year to 31 March 20X1 depreciation charged on leased plant was $1,800,000.

What amount will be shown in the statement of cash flows of Deltoid Co for the year ended 31 Marc
in respect of payments made under leases?

NCA at the year end (Would be) 700

Step 1 NCA at the year end (in fact) 6,500
Acqusition by leasing 5,800

Lease Obligation 1 2,800

Step 2 Purchases 5,800
Lease Obligation 2 (Would be) 8,600
Lease Obligation 2 (in Fact) 6,500
Payment Paid 2,100
ant was $1,800,000.

d Co for the year ended 31 March 20X1