08-01-2005, 09:08 AM
Finally someone replied[D]
Well there is no lease document as such.. as the lessor is not a leasing company however they have produced a socalled lease amortisation schedule as part of the purchase documentation. The transaction fulfills the criteria of a finance lease with a bargain purchase option at the end of the loan/lease term.
The merchandise is not irrelevant to the business... but the price is not x-y but x+y --- y being the commercial rate of interest.
The question is.... should we capitalise x+y ...treating it a supplier credit or x-y... treating it a finance lease (remember it fulfills all substantive conditions but is not legally a finance lease)
... from the fair value perspective... i am inclined to say that it should be capitalised at 'x' but we have so many instances of supplier's credit in real life which have implicit financing structures which are simply ignored in accounting.
.. your comments???
Well there is no lease document as such.. as the lessor is not a leasing company however they have produced a socalled lease amortisation schedule as part of the purchase documentation. The transaction fulfills the criteria of a finance lease with a bargain purchase option at the end of the loan/lease term.
The merchandise is not irrelevant to the business... but the price is not x-y but x+y --- y being the commercial rate of interest.
The question is.... should we capitalise x+y ...treating it a supplier credit or x-y... treating it a finance lease (remember it fulfills all substantive conditions but is not legally a finance lease)
... from the fair value perspective... i am inclined to say that it should be capitalised at 'x' but we have so many instances of supplier's credit in real life which have implicit financing structures which are simply ignored in accounting.
.. your comments???
