We are here with you hands in hands to facilitate your learning & don't appreciate the idea of copying or replicating solutions. Read More>>
On 1st January 2000, Ali (Pvt.) Ltd. signed a contract of lease financing with Mahmood (Pvt.) Ltd. The brief details of the contract are as follows:
The leasing contract is about a piece of machine for the period of 6 years which will be used in the operations of the business. The cost of machine is Rs. 350, 000.
The interest rate to be applied to the six payments is 15%.
Lessor and lessee (Ali and Mahmood) cannot terminate the lease contract at any stage
of lease financing.
It is estimated the annual lease rentals will be paid at the end of each year (on 31st
December of every year).
Estimated annual lease rental is Rs. 92,500.
Estimated residual value is 0 for the machinery and useful economic life of the machine
is 8 years.
Ali (Pvt.) Ltd. uses straight line method of depreciation for all categories of assets.
Net profit for the Ali (Pvt.) Ltd. for the year 2000 is Rs. 185,000
Based on the above information, you are required to answer the following questions:
a) Show how Ali (Pvt.) Ltd. will account for the above transaction in its statement of financial position at 31st December 2000, in accordance with the principles laid down in IAS 17.
b) Also, show the effects of Lease agreement in Income statement and cash flow statement of the entity (suppose Ali (Pvt.) Ltd. is using indirect method for the preparation of cash flow statement).
c) Explain why the need of standardization of lease agreements, was felt by the standard setters (FASB) and discuss some of the rationales behind the approach adopted by the standard setters.
d) The lessor has suggested that the lease could be drawn up with a minimum payment period of one year and an option to renew. Discuss with logical points that why this option might be attractive to the lessee.
.+ http://bit.ly/vucodes (Link for Assignments, GDBs & Online Quizzes Solution)
+ http://bit.ly/papersvu (Link for Past Papers, Solved MCQs, Short Notes & More)+ Click Here to Search (Looking For something at vustudents.ning.com?) + Click Here To Join (Our facebook study Group)
guys plz share ur views about this question over here...thnx
Please Discuss here about this assignment.Thanks
Our main purpose here discussion not just Solution
We are here with you hands in hands to facilitate your learning and do not appreciate the idea of copying or replicating solutions. Read More>>
For Important Helping Material related to this subject (Solved MCQs, Short Notes, Solved past Papers, E-Books, FAQ,Short Questions Answers & more). You must view all the featured Discussion in this subject group.
For how you can view all the Featured discussions click on the Back to Subject Name Discussions link below the title of this Discussion & then under featured Discussion corner click on the view all link.
Or visit this link
Please Click on the below link to see…
helpout guys....plz share ur views
no update for this scenario????
idea share kro ge to solution find out ho ga...plz share
solution share kro bhaiyo....aik dsry ke help se idea mil jy ga
bro share kro ideas apny...solution find out ho ga