.... How to Find Your Subject Study Group & Join ....   .... Find Your Subject Study Group & Join ....  

We are here with you hands in hands to facilitate your learning & don't appreciate the idea of copying or replicating solutions. Read More>>

Study Groups By Subject code Wise (Click Below on your university link & Join Your Subject Group)

[ + VU Study Groups Subject Code Wise ]  [ + COMSATS Virtual Campus Study Groups Subject Code Wise ]

Looking For Something at vustudents.ning.com?Search Here


This Content Originally Published by a member of VU Students.

Views: 1891

See Your Saved Posts Timeline


Replies to This Discussion



anyone else done this assignment???

MGT401 assign idea sol

Assignment MGT401

As per IAS 17, a lease is classified as finance lease or operating based on following criteria;
The lease transfer ownership of the asset of the lease by the end of the lease term.
The lease has the option to purchase the asset at a price which is expected to be sufficiently lower than fair value at the date of the option become exercisable.
At the inception of the lease it is a reasonable certain that the option will be exercised.
The lease term is for the major part of economic life of the asset even if title is not transferred.
In case above criteria is not met the lease will be classified as operating lease,
In the question the lease term is for the major part of the economic life of the asset. This situation reflects that it’s a finance lease because as per IAS 17 if this condition exists and even if title is not transferred at the end of the contract it`s a finance lease.

Statement of financial position:
As at December 30, 2000
Dr. Asset 350,000
Cr. finance lease payable 350,00

Dr. deprecation 58,333
Cr. Accumulated depreciation 58,333
Income of Statement
For the year ended on December 31,200
Dr. finance charge 40,000
Cr. Finance charge payable 40,000
Statement of Cash flow
For the ended on December 31,2000
Amount in PKR

Net profit 185,000
Add: Deprecation 58,333
Adjust profit: 243,333

Operation activities:
Less: finance charge 40,000
Net cash consumed in operating activities 40,000
Financing Activities:
Less: Operating lease paid52.500
Net cash consumed in financing Activities:
Net cash consumed (92,500)
& Cash equivalent 150,833

The need of standardization of lease agreements was felt by the standard setter`s reason being the need to account for the lease liability appropriately in the financial statement. By accounting lease one can be in better position to decide the expected cash flows, expenses and financial position of an entity.

D) Lessee can have the following advantage in the given scenario.
1. Lease is not legally bound to pay term basis.
2. Lease can switch to cheaper options if they are available.
3. If leased asset is no more required there would be no penalties after completing a year in turn itsBit flexible option for leasee.



Forum Categorizes

Job's & Careers (Latest Jobs)

Admissions (Latest Admissons)

Scholarship (Latest Scholarships)

Internship (Latest Internships)

VU Study

Other Universities/Colleges/Schools Help

    ::::::::::: More Categorizes :::::::::::

Member of The Month

1. ٹمبکٹو

---, Pakistan

© 2017   Created by + M.Tariq Malik.   Powered by

Promote Us  |  Report an Issue  |  Privacy Policy  |  Terms of Service