06-19-2006, 03:35 PM
<blockquote id="quote"><font size="1" face="Verdana, Tahoma, Arial" id="quote">quote<hr height="1" noshade id="quote">Residual value shall not be taken as present value of future cash flows relating to disposal this was a treatment of previous standard. Now, the treatment is simple, look for the asset having been passed through the same useful life as ur's and assess its current market value. Assign this value as residual value to ur's.<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
let me take an example;
date today is 19 june 2006
today we buy an asset for Rs 1000/- & its useful life is 10 years
today,a similar asset,fully depreciated, which also had a useful life of 10 yrs has current market value RS 100/-
means residual value of our new asset purchased is RS100/-BUT isn't this amount in present value terms.Means say after 10 yrs on 19 june 2016 the asset is sold for RS 250/- infaltion being about 10%.
If this is so then y do we calculate present value of Residual value and subtract it from cash price in computation of lease rentals.We should have directly subtracted residual value from cash price and computed rentals
let me take an example;
date today is 19 june 2006
today we buy an asset for Rs 1000/- & its useful life is 10 years
today,a similar asset,fully depreciated, which also had a useful life of 10 yrs has current market value RS 100/-
means residual value of our new asset purchased is RS100/-BUT isn't this amount in present value terms.Means say after 10 yrs on 19 june 2016 the asset is sold for RS 250/- infaltion being about 10%.
If this is so then y do we calculate present value of Residual value and subtract it from cash price in computation of lease rentals.We should have directly subtracted residual value from cash price and computed rentals
