Endale Ltd (which applies IAS17) prepares accounts to 31 March each year. On 1 April 2016, the company acquired an asset by means of a finance lease. The fair value of the asset on this date was £40,000 and the company was required to make six half-yearly lease payments of £7,674 each. The first payment was payable on 1 April 2016. The rate of interest implicit in the lease was 6% per half-year.
Calculate the finance charge which should be recognised as an expense in the company’s for each of the years to 31 March 2017, 2018 and 2019, using:
(a) The actuarial method (prepare a table with one row for each half-year).
(b) The sum of digits method.
(c) The level spread method.
