Company (A) purchase a Asset from another company at Rs 3,276,000/- and the same has been leased from Bank, as per agreement bank transfer 2,828,000/- to Company A account which the company pays to the seller. Company A Lease the asset at Rs 4,450,000/- from bank down payment 1,335,000/- IRR=16.34950%. Plz tell me about its treatment in Financial Statements
Asset (Dr.) 3,276,000
Payable (Cr.) 3,276,000
(Asset purchased)
Bank (Dr.) 2,828,000
Deferred loss (Dr.) 448,000
Asset (Cr.) 3,276,000
Asset subject to FL (Dr.) 2,828,000
Liability subject to FL (Cr.) 2,828,000
(Account for liability at fair value)
Interest will be accrued at the time of payment of installment and entry will be
Interest expense (Dr.)
Liability subject to FL (Cr.)
then installment payment entry
Deferred loss will be recognized in P & L over the lease term
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