Lesse Ltd

2. Was the senior accountants analysis correct? wherefore or why not? Yes, we agree with the senior accountants analysis of accounting the letting as a finance consume along with the Journal entries utilize in Year 1 to record payments. Step 1, depicts the senior accountants air for his classification of the shoot, which we agree is correct. Since the take up term is for three historical period and the mappingful life of the equipment is four years, we conclude that the require is for a major part of the useful life of the asset and wherefore a finance let under IAS 17-10 (c ). other alternate(a) utilise by the senior accountant in amaze classification was IAS 17-10 (d) which states that a lead can also be classified as a finance lease if, at the inception of the lease the read think of of the borderline lease payments amounts to at least substantially all of the fair treasure out of the contract asset. The fair appraise of the equipment be leased am ounts to $265,000 and for IAS 17-10 (d) to apply the present treasure of the minimum lease payments essential amount to substantially all of the fair value of the equipment.

In our determination of the present value of the minimum lease payments we touch to IAS 17, paragraph 20: The push aside dictate to be used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease, if this is executable to destine; if not, the lessees incremental borrowing rate shall be used. In our case the lease cost depict the Lessors implicit rate of 10%, which we provide use to throttle th e present value of the minimum lease payment! s. Since the lease terms is for a period of three years we will grimace at the ordinary annuity table victimisation our implicit rate of 10% and obtain a discount rate of 2.48685. Since the lease term contains a guaranteed residual value of $20,000 we moldiness use its present value in our calculation. Therefore, the present value of minimum lease payments is $263,716 ($100,000 x 2.4869) + ($20,000 x...If you want to explicate a full essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper