07-10-2006, 08:56 PM
Lessee ok........
Lessor
Operating lease
Initial direct costs incurred by lessors in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as the lease income.
Finance lease
Lessors include in the initial measurement of finance lease receivables(MLP) the initial direct costs incurred in negotiating a lease. This treatment does not apply to manufacturer or dealer lessors. Manufacturer or dealer lessors recognise costs of this type as an expense when the selling profit is recognised.
one more point that if the fair value of asset is 80 and MLP is 100. i dont think it shud be classified as a finance lease. i think u shud review the question.
Lessor recognizes receivable = net investment in lease i.e.= PV(MLP+UGRV)
practically amount of rentals is same but theoratically it can be different.
u can say i.e. systematic allocation..
sory 4 a very late reply.. reason u know..
Lessor
Operating lease
Initial direct costs incurred by lessors in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as the lease income.
Finance lease
Lessors include in the initial measurement of finance lease receivables(MLP) the initial direct costs incurred in negotiating a lease. This treatment does not apply to manufacturer or dealer lessors. Manufacturer or dealer lessors recognise costs of this type as an expense when the selling profit is recognised.
one more point that if the fair value of asset is 80 and MLP is 100. i dont think it shud be classified as a finance lease. i think u shud review the question.
Lessor recognizes receivable = net investment in lease i.e.= PV(MLP+UGRV)
practically amount of rentals is same but theoratically it can be different.
u can say i.e. systematic allocation..
sory 4 a very late reply.. reason u know..
