An Example To Illustrate How To Classify A Lease As Finance Lease

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 [...]

December 2nd,2009 | Tags:Finance Lease,finance lease example | Category:Accounting for Lease | Leave a comment

Characteristic Of Finance Lease

Tabulate below are the characteristic that indicates it as a Finance lease:-

Transfer of ownership at the end of the lease term to a lessee [IAS17.10(a)(R.05)]. The lessee has a bargain purchase option [IAS17.10(b)(R.05)]. The lease term covers the major part of the asset’s economic life [...]

July 7th,2008 | Tags:Finance Lease | Category:Accounting for Lease | One comment