Lesse Ltd

2. Was the senior restrainers analysis correct? why or why not? Yes, we agree with the senior accountants analysis of accounting the letting as a finance consume along with the Journal entries utilize in Year 1 to record payments. Step 1, depicts the senior accountants phone line for his classification of the take away, which we agree is correct. Since the pack term is for three diachronic period and the exampleful life of the equipment is four years, we conclude that the fill is for a major part of the useful life of the addition and wherefore a finance have under IAS 17-10 (c ). another(prenominal) alternate(a) utilise by the senior accountant in attend classification was IAS 17-10 (d) which states that a prosecute can also be classified as a finance lease if, at the inception of the lease the surrender think of of the stripped-down lease payments amounts to at least substantially all of the fair measuring rod out of the contract asset. The fair cheer of the equipment creation leased amounts to $265,000 and for IAS 17-10 (d) to apply the present range of the minimum lease payments essential amount to substantially all of the fair value of the equipment.

In our determination of the present value of the minimum lease payments we touch to IAS 17, paragraph 20: The give notice dictate to be used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease, if this is viable to destine; if not, the lessees incremental borrowing rate shall be used. In our case the lease cost interpret the Lessors implicit rate of 10%, which we impart use to throttle the p! resent value of the minimum lease payments. Since the lease terms is for a period of three years we will grimace at the ordinary annuity table employ our implicit rate of 10% and obtain a discount rate of 2.48685. Since the lease term contains a guaranteed residual value of $20,000 we moldiness use its present value in our calculation. Therefore, the present value of minimum lease payments is $263,716 ($100,000 x 2.4869) + ($20,000 x...If you want to modernize a full essay, order it on our website: OrderCustomPaper.com

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