AC2101 S1 2014 Seminar 5 Leases (Anil).pptx

Gl refers to the dierence between sp and ca if sp fv

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Unformatted text preview: e 1 year later) = $170 1.  2.  3.  4.  <10% 10% to <15% 15% to <20% >20% 23 Sales- Type Lease *  When lessor uses a very low deferred payment scheme to boost sales (i.e., artificially low interest rate), how should the net income be apportioned between gross profit and (unearned) interest income? *  Artificially low interest rate ~ marketing promotion tactic to boost lease revenue, similar in nature to sales discount à༎ offset against sales q༇  By the same rationale, FRS 17:45 requires sales be recorded at MLP discounted at fair rate (i.e., using the normal effective interest rate) q༇  Note: Affects only lessor’s lease accounting 24 12 Continuing with the example… Unadjusted sales price Lease price Cash price FRS17:45 adjusted sales $170 $160 (unadjusted) $170 $136 = PV(MLP) 6.25% (implicit) 25% (normal) Dr...
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