Lessee Ltd. Case

Group 4 January 31, 2012 Lessee Ltd. case 1) The junior restrainer is incorrect, because to bugger off with the Lessee Ltd. Is a British company that applies IFRS rules and regulations for preparing their financial statements. The junior accountant used the generally accepted accounting principles standards to prep be the computations and entries with is incorrect. Since he used the GAAP standards for occupy accounting, he identified the rent as an in operation(p) lease because as he noted in while preparing the journal entries he concluded that Since the equipment reverts rear end to Lessor Inc., it is an operating lease. down the stairs the IFRS codifications and based on the Lessee Ltd. subject the company has finance lease instead of an operating lease. however the junior accountant used the incremental borrowing drift when implicit rate is known which is also accord to GAAP, since they are filing with IFRS regulations, it is wrong. 2) The senio r accountant is correct because he is utilise the IFRS regulation standards. The senior accountant noted on his first step that The lease barrier is for three years. The efficacious profit and butter of the equipment is four years. Since the lease term is for a major(ip) firearm of the useful sprightliness of the equipment, it is a finance lease.

Under the IFRS standards, a lease is considered a finance lease when: a) The non-cancelable lease term is for Major Portion of the expected economical tone of the asset. So the lease term was 3 years, and the useful life of the equipment is 4 years. This ind icated that the lessee has use the major por! tion of the expected economic life of the asset. b) The present grade of the minimum lease payments is lucifer to or greater than Substantially all of the fair pass discernment of the asset. This rule means that since the fair market measure out (FMV) at the lease inception is $265,000 and the lessee has used the equipment as its lease debt peter of $244,370 this indicates that the lessee has used greater than substantially all of the fair value of the asset....If you want to get a full essay, order it on our website: OrderCustomPaper.com

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