Below example demonstrate how to classify a lease into a finance lease:
Question:
ABC Ltd enters a lease agreement on 1 January 2009 to have the right to use the asset for 10 years. The economic life of the asset is 11 years. The fair value of the asset is $12 million. The lessee agreed to pay $1.6 million annually for 10 years at the beginning of each year. The present value of the minimum lease payment is $10.5 million.
Required: How should the lease be classified?
Answer: Continue reading An Example To Illustrate How To Classify A Lease As Finance Lease
Hire purchase interest are apportioned based on the reducing balance method (part 1) and on Straight line basis(part 2).
This final part 3 looks at another commonly used method to apportion hire purchase interest namely the Sum of digit method of Rule of 78 Continue reading How To Apportion Hire Purchase Interest-Using Sum Of Digit Method Or Rule Of 78 (Part 3 of 3)
Part 1 shows the reducing balance method .
This article looks at how the hire purchase interest is apportioned over the period of the agreement using the Straight Line method. Continue reading How To Apportion Hire Purchase Interest-Straight Line Method (Part 2 of 3)
Note that the hire purchase interest needs to be apportioned over the period of the agreement. The commonly used methods are the Reducing Balance method, Straight Line method and Sum of Digits or Rule of 78 method
Below example illustrate the Reducing Balance method to apportion hire purchase interest:- Continue reading How To Apportion Hire Purchase Interest-Reducing Balance Method (Part 1 of 3)
In FRS112 on Income Taxes or IAS 12, there is a requirement for a reconciliation statement between the Effective tax rate (ETR) to the Statutory Rate in the notes to the financial statement wherein the following are normally taken up:
Non allowable expenses
Deferred tax assets not recognized
Expenses not allowed for tax purposes
Non taxable income
Differential tax rate-SME’s ( [...]
FCCA,CA(MIA)with more than 26 years of post-qualifying working experiences. Previous working stints with one of the big accounting four, Regional GFC & Group Treasurer in a group of Malaysian and Group CFO in Singapore public listed concern.
Also author to another very popular free educational accounting cum finance blog: http://basiccollegeaccounting.com under the branding of College Accounting Coach.
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