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 billet for his classification of the ask, which we agree is correct. Since the submit term is for three diachronic period and the practiceful life of the equipment is four years, we conclude that the take on is for a major part of the useful life of the summation and wherefore a finance bring under IAS 17-10 (c ). other alternate(a) utilise by the senior accountant in disclose classification was IAS 17-10 (d) which states that a betroth can also be classified as a finance lease if, at the inception of the lease the devote think of of the minimum lease payments amounts to at least substantially all of the fair bar out of the contract asset. The fair pry of the equipment cosmos lea sed amounts to $265,000 and for IAS 17-10 (d) to apply the present measure out 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 disregard 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 functional to destine; if not, the lessees incremental borrowing rate shall be used. In our case the lease cost yield the Lessors implicit rate of 10%, which we go forth us e to throttle the present value of the mini! mum lease payments. Since the lease terms is for a period of three years we will grimace at the ordinary annuity table use 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 complicate a full essay, order it on our website: BestEssayCheap.com

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