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On 1 May 20X8 DEF enters into a contract to lease plant with a fair value of $200,000. Annual lease payments of $50,000 are to be paid in advance and DEF incurred direct costs to arrange the lease of S2.000 The present value of future lease payments at 1 May 20X8 is $190,000.

What is the amount to be recognised as a right-of-use asset on 1 May 20X8?

Options:

$192 000

$200,000

$240,000

$242000

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Question 2

Which of the following is the most appropriate definition of the term 'factoring'?

Options:

Where a business sells its accounts receivable to a third party at a discount

Where a business borrows a loan with short-term conditions from a third party

Where a business sells equity to third parties to gain short-term finance

Where a business is provided with a highly flexible regular source of short-term finance by a bank

Question 3

An entity has an inventory holding period of 52 days.

This means that the inventory:

Options:

takes 52 days to arrive after it has been ordered.

stays in the entity's warehouse for an average of 52 days before it is sold.

takes 52 days to manufacture.

takes 52 days to be paid for.

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