AC2101 S1 2014 Seminar 5 Leases (Anil).pptx

E one as operating lease the other as nance lease 3

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Unformatted text preview: ease arrangement will always classify it as the same kind of lease (i.e., both as operating lease or both as finance lease) 2.  Lessor & lessee in a lease arrangement will always classify it as different kinds of lease (i.e., one as operating lease, the other as finance lease) 3.  Lessor & lessee in a lease arrangement will usually classify it as the same kind of lease (i.e., both as operating lease or both as finance lease) but not always 4 2 What could cause lessor & lessee to classify a lease differently? 1. Whether asset title passes at end of lease 2. Whether BPO exists 3. Whether lease term is a major part of asset’s useful life 4. Whether MLP amount is the same for lessee & lessor * 5. Whether lessee & lessor use the same discount rate for MLP * 6. Whether asset is of a specialized nature * Relate to whether PV(MLP) is substantially all of asset’s FV This means that lease classification tests must be conducted for BOTH lessor & 5 lessee. Seminar 5 Agenda -   Note on Residual Values -   Note on leasehold land and building -   Note on investment property under leases -   Quick review of FRS40...
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This document was uploaded on 02/10/2014.

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