A. Determine the current value of the lease at the beginning of the lease. Amortization After the initial capitalization of the asset, the asset must be adjusted according to amortization over the shorter term of the lease or on the economically viable life of the asset. The balance sheet will be as follows: a lease agreement, considered a lease-financing agreement, requires annual lease payments of US$60,000 over a five-year period (including the duration of the asset`s usefulness), with the first payment made on January 1, the start date of the lease agreement. The interest rate is 5%. (FV of 1 , PV of 1, FVA of 1, APV of 1, FVAD of $1 and PVAD of 1) (Use the corresponding factors in the tables provided.) Mandatory: a. Determine the current value of the lease at the beginning of the lease. B. Create partial amortization by the first payment on January 1, 2017.c. If the taker`s exercise is the calendar year, what would be the amount of upstream tax related to the lease that the taker would declare in his profit and loss account for the first year after December 31? Post-Account accounting: Rent/Advice Interests: Use the rental table and complete next year to help you finalize the split between long-term debt and short-term commitments. Financial leasing indicators There are many risks and rewards that are described within the standard, but for the purposes of the F7 paper review, there are several important areas. The main reward is where the lessor has the right to use the estate for most or all of the economic life. The main risks are where the lessor pays to insure, maintain and repair the assets.
If the risks and income are retained by the taker, the content is such that, although the underwriter is not the rightful owner of the asset, the economic reality lies in the fact that he acquired an asset with financial resources from the leasing company and that an asset and liability should therefore be accounted for. The other indicators of a lease-financing contract are: Post-accounting: amortization Advice: amortization for the year ended March 31, 2010 is a simple annual expense, but you must also take into account the amortization for the first six months of the lease, which was imputed in the year ended March 31, 2009, because it is necessary to find the final value in the balance sheet.