08-14-2009, 02:14 AM
Dear Mr. Kamran
To my understanding, risks and rewards incidental to owner ship means that; you becomes entitled to receive all the benefits from the asset, which would have been available if you have had purchase that asset like when you are entitled to obtain additional production of the asset like when you guarntee the residual value of the asset and therefore undertaking the risk of impairment and obsolesence.
I take the example of sale in this situation. Sale is considered to have been completed when the risks and rewards related to that asset pass on the buyer(some other conditions as well). If the lease is more near to this one then it is finace lease other wise operating.
50 % of Residual value is guarnteed which is not substantial.
My honour to receive your comments. looking forwards to you.
Regards
Waqas
To my understanding, risks and rewards incidental to owner ship means that; you becomes entitled to receive all the benefits from the asset, which would have been available if you have had purchase that asset like when you are entitled to obtain additional production of the asset like when you guarntee the residual value of the asset and therefore undertaking the risk of impairment and obsolesence.
I take the example of sale in this situation. Sale is considered to have been completed when the risks and rewards related to that asset pass on the buyer(some other conditions as well). If the lease is more near to this one then it is finace lease other wise operating.
50 % of Residual value is guarnteed which is not substantial.
My honour to receive your comments. looking forwards to you.
Regards
Waqas
