AC2101 S1 2014 Seminar 5 Leases (Anil).pptx

2 3 4 10 15 20 25 21 what is the sales type lessors

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Unformatted text preview: income, there is gross profit on sales. * Issue of artificially low interest rate charged - Motive? - Discount PV of MLP at fair interest rate 16 8 Sales- Type Lessor *  Lessor’s Net investment (NI) = PV of Gross investment (GI) = Leased asset’s fair value = Cost + Gross Profit (GP) *  Lessor’s lease receivable = GI = NI + Interest income Ø།  Lessor’s lease receivable = (Cost + GP) + Interest income Ø།  Lessor’s lease receivable – Cost = Interest income + GP Ø།  Lessor’s net income = Interest income + GP v༇ Lessor earns 2 types of income from sales- type lease •  Gross profit on sales & interest income from financing See write-up on sales-type lease in Seminar Outline. 17 Sales- Type Lease *  Assume a seller /lessor sells machinery. *  He b...
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This document was uploaded on 02/10/2014.

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