03-04-2011, 01:55 AM
How should you explain the following and journalize it in your accounting books?
A company decideds to acquire a second car to facilitate operations. The second car will not be bought on cash basis since the company have some cash flow difficulties, so they decide to lease it from a local dealer who charges ⬠1.000 per month for 4 years. For the dealer the car has a fair value of ⬠45.000. The lease has an implicit rate of 8% and the useful life of the car was estimated to be 6 years.
Question 1 What are the procedures for leasing a business car for your company and how should this be recorded in the accounting books (journalizing etc.)? IFRS vs US GAAP.
Question 2 What if it is not clear whether at the end of the lease term the two parties. (dealer and Company) would negotiate the contract further and who would take control of the car at that point? What is important to consider in this case?
Question 3 Explanaition of the IMPLICIT RATE OF 8% in this case?
Thankyou All,
A company decideds to acquire a second car to facilitate operations. The second car will not be bought on cash basis since the company have some cash flow difficulties, so they decide to lease it from a local dealer who charges ⬠1.000 per month for 4 years. For the dealer the car has a fair value of ⬠45.000. The lease has an implicit rate of 8% and the useful life of the car was estimated to be 6 years.
Question 1 What are the procedures for leasing a business car for your company and how should this be recorded in the accounting books (journalizing etc.)? IFRS vs US GAAP.
Question 2 What if it is not clear whether at the end of the lease term the two parties. (dealer and Company) would negotiate the contract further and who would take control of the car at that point? What is important to consider in this case?
Question 3 Explanaition of the IMPLICIT RATE OF 8% in this case?
Thankyou All,
