AC2101 S1 2014 Seminar 5 Leases (Anil).pptx

AC2101 S1 2014 Seminar 5 Leases(Anilx

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Unformatted text preview: uys them at a cost of $100. *  He enters into a sales- type lease agreement with his customer. *  Payment is to made at the end of the first year. *  The fair value of the asset at the start of the lease agreement is $160 *  The effective interest rate = 25%. Arrangement 1 – Normal rate of interest *  Annual lease payment is $200 paid at the end of the year. Arrangement 2 – Artificially low rate of interest *  Annual lease payment is $170 paid at the end of the year. See write-up on sales-type lease in Seminar Outline. 18 9 What is the sales- type lessor’s gross profit under arrangement 1? •  Cost of asset to lessor = $100 •  Cash sale price = $160, or •  Deferred payment scheme (payable 1 year later) = $200 1.  2.  3.  4.  $0 $40 $60 $100 19 What is the sales- type lessor’s interest income under arrangement 1? •  Cost of asset to lessor = $100 •  Cash sale price =...
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This document was uploaded on 02/10/2014.

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