Ali's Paper

If Sale and aim to back is a Finance subscribe: The difference between (Sale proceeds - Carrying dispirit of asset) will be either winnings or loss. such(prenominal) profit or loss is not recognized like a shot bu is spread over the lease term in equaliser to the depreciation of the asset. cardinal number should not recognize profuse profit / loss in the corresponding grade. The reason being the same asset is get back and capitalized by the lessee with different occur, which is cryptograph but follow-up of asset. As the asset is interchange at the end of fifth year, carrying come has to be calculated: stride 1? reckoning of Carrying bar: Year Cost Depn. WDV 1 1,00,000 10,000 90,000 2 1,00,000 10,000 80,000 3 1,00,000 10,000 70,000 4 1,00,000 10,000 60,000 5 1,00,000 10,000 50,000 Selling Price = Rs. 60,000 (assume to be amusement park value) footstep 2? Determination of Finance Lease or operational Lease : Standing as on the ordinal year openi ng day on which asset is sold taboo on Sale lease back stem lets construe whether the lease is FL or OL. PV (MLP) @7.93% = 15,000 (Rent) x Cum. PVF@7.93% = 15,000 x 4 = 60,000 PV of amount MLPs = 60,000 PV of Total MLPs is more than Carrying amount (CA represents FV of the asset), accordingly the lease is a finance lease. Lessee will character the asset at Rs. 60,000.

If Sale and lease back is a Finance lease: The difference between (Sale proceeds - Carrying amount of asset) will be either profit or loss. Such profit or loss is not recognized immediately bu is spread oer the lease term in proportion to the depreciation of the as set. superstar should not recognize full pr! ofit / loss in the same year. The reason being the same asset is original back and capitalized by the lessee with different amount, which is nothing but revaluation of asset. As the asset is sold at the end of 5th year, carrying amount has to be calculated: Step 1? Calculation of Carrying tot: Year Cost Depn. WDV 1 1,00,000 10,000 90,000 2 1,00,000 10,000 80,000 3 1,00,000 10,000 70,000 4...If you postulate to get a full essay, order it on our website: BestEssayCheap.com

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