07-03-2006, 08:09 AM
thx dear
i got it
just hav some queries on initial direct costs
lesee
any initial direct cost r included in cost of asset recognized and thereby asset is depreciated,at shorter of lease term or useful life
not included in MLP B/C this initial direct cost doesn't in any ways represent a payment we have to make to lessor,however,initial direct cost if of such nature that they represent a liability to lessor,then included in MLP
not deducted from cost of asset 4 computaion of lease rentals,where it isn't part of MLP,howver if it is part of MLP then deducted from cost of asset in computation of lease rentals
lessor
any initial direct cost incurred by lessor included in cost of asset..
in case of operating lease ----- lessor simply depreciates it over useful life
now here arises a question....lets take an example
cost of asset = 100 ,useful life =10yrs
initial direct cost= 10,lease term = 5yrs
now lessor will depreciate cost of asset over 10 yrs & initial direct cost over 5 yrs ,as this initial direct cost is only 4 that specific lease ,so its economic benefit shall also be recognised over lease term...is thiS really the CAse?
in case of finance lease
in case of finace lease asset wud be depreciated by lesee at lower of F.v or P.V of MLP
now if cost of asset to lessor = 100
and asset is recorded at Rs 80 by lessee ,F.V being lower
then wat about depreciatin of Rs 20?
just respond to part where i stand wrong or otherwise there is a question,any unanswered portion wud be assumed by me 2 be correct
1 more iSsue
rentals are computed by lessee or by lessor(it shud be lessor i think) & at which amount? the amount at which asset is recognized by him?i.e lower of F.V or P.V of MLP or at cost... ,less P.V of any R.V
and is amount of rentals always same for both lessee & lessor?
rentals are just a systematic allocation of whatever lessee owes to lessor...isn't it?
and thx 1nce again
i do hav an idea that u people r busy always & nowdays specially itz being da yr end
i got it
just hav some queries on initial direct costs
lesee
any initial direct cost r included in cost of asset recognized and thereby asset is depreciated,at shorter of lease term or useful life
not included in MLP B/C this initial direct cost doesn't in any ways represent a payment we have to make to lessor,however,initial direct cost if of such nature that they represent a liability to lessor,then included in MLP
not deducted from cost of asset 4 computaion of lease rentals,where it isn't part of MLP,howver if it is part of MLP then deducted from cost of asset in computation of lease rentals
lessor
any initial direct cost incurred by lessor included in cost of asset..
in case of operating lease ----- lessor simply depreciates it over useful life
now here arises a question....lets take an example
cost of asset = 100 ,useful life =10yrs
initial direct cost= 10,lease term = 5yrs
now lessor will depreciate cost of asset over 10 yrs & initial direct cost over 5 yrs ,as this initial direct cost is only 4 that specific lease ,so its economic benefit shall also be recognised over lease term...is thiS really the CAse?
in case of finance lease
in case of finace lease asset wud be depreciated by lesee at lower of F.v or P.V of MLP
now if cost of asset to lessor = 100
and asset is recorded at Rs 80 by lessee ,F.V being lower
then wat about depreciatin of Rs 20?
just respond to part where i stand wrong or otherwise there is a question,any unanswered portion wud be assumed by me 2 be correct
1 more iSsue
rentals are computed by lessee or by lessor(it shud be lessor i think) & at which amount? the amount at which asset is recognized by him?i.e lower of F.V or P.V of MLP or at cost... ,less P.V of any R.V
and is amount of rentals always same for both lessee & lessor?
rentals are just a systematic allocation of whatever lessee owes to lessor...isn't it?
and thx 1nce again
i do hav an idea that u people r busy always & nowdays specially itz being da yr end
