Leases

meyer cohn
Mind Map by meyer cohn, updated more than 1 year ago More Less
meyer cohn
Created by meyer cohn over 4 years ago
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Leases theory
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Leases
1 Classification
1.1 Operating
1.1.1 Leases not classified as finance
1.1.2 Accounting / Recognition
1.1.2.1 Straight-line basis for both parties
1.2 Finance
1.2.1 Accounting / Recognition
1.2.1.1 Lessor
1.2.1.1.1 1. Derecogn. asset; 2. Recogn. receivable = Net investment (GI (Min. lease pmts + unguarunteed RV) discounted @ interest implicit in lease); 3. Initial direct cost incl. in NI; 4. Recogn. finance income as per effective interest rate method; 5. Lease PMTS against GI
1.2.1.1.2 Remember manufacturer/dealer lessors
1.2.1.2 Lessee
1.2.1.2.1 1. At inception of lease term recogn. an asset & liability at LOWER of: -FV of leased asset;-PV of min. lease pmts; 2. Apportion pmts between finance cost & capital; 3. Initial direct cost incl. in CA of asset; 4. Deprec. asset over shortest of lease term/econimic life
1.2.2 Possible indicators: 1. Ownership transferred at end of lease; 2. Option to purchase; 3. PV of min. lease pmts =/< FV of asset; 4. Specialised asset;
2 Interest rate (Implicit rate) : PV = Fair value of leased (Incl. Direct cost) asset ; PMT = Installment; FV = GRV +URV ; N = Lease term ;CompI= IIR
3 Calc. PV of min. lease pmts: PMT = Installment; FV = GRV(Only); N = term; i = IIR; CompPV=
4 Example journal (Excl. VAT or funnies)
5 Deferred tax
6 Sale & leaseback transaction
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