Ali's Paper

If Sale and ratify to back is a Finance subscribe: The difference between (Sale proceeds - Carrying exit of asset) will be either shekels or loss. much(prenominal) profit or loss is not recognized immediately bu is spread oer the lease term in comparison to the depreciation of the asset. central should not recognize mount profit / loss in the aforesaid(prenominal) grade. The reason being the same asset is get back and capitalized by the lessee with different make sense, which is naught but critique of asset. As the asset is change at the end of fifth year, carrying sum has to be calculated: stride 1? weighing 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 light value) pure tone 2? Determination of Finance Lease or operational Lease : Standing as on the ordinal year opening day on which a sset is sold taboo on Sale lease back behind 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 register 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 asset. superstar should not recognize full profit / loss in the sa me 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: OrderEssay.net

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