CPA Uganda Intermediate Practice Questions - ICPAU CPA(U) Intermediate Level Exam

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On 1 January 2025, Mukono Ltd enters into a 4-year lease for machinery. The lease payments are UGX 30,000,000 payable annually in arrears. The interest rate implicit in the lease is 8% per annum. The present value factor of an ordinary annuity for 4 years at 8% is 3.3121. Mukono Ltd incurs UGX 2,000,000 of initial direct costs to negotiate and finalize the lease. Under IFRS 16, what are the initial carrying amounts of the Right-of-Use (ROU) asset and the lease liability recognized on 1 January 2025?

ROU Asset: UGX 99,363,000; Lease Liability: UGX 99,363,000 ROU Asset: UGX 101,363,000; Lease Liability: UGX 99,363,000 ROU Asset: UGX 101,363,000; Lease Liability: UGX 101,363,000 ROU Asset: UGX 122,000,000; Lease Liability: UGX 120,000,000

Correct Answer:

ROU Asset: UGX 101,363,000; Lease Liability: UGX 99,363,000

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