BonneSante S Essay

Therefore in this agreement the equipment is going to be partially financed by the lessor (Northwest) through a third-party financial institution (Lender) and act as a leveraged lease, wherein the lending company holds the title to the leased asset, while the lessor creates the agreement with the lessee (BNRR) and collects the payment for the use of the equipment. Therefore the lease in this case will be regarded as a financial decision for BNRR

• Lessor may require the lessee to perform general repairs and maintenance on the leased premises.

Case 11-6 deals with Lessee Ltd., a company that operates in Britain and uses IFRS. The question in this case is how to classify a lease that Lessee, Ltd. acquired from Lessor Inc. The accounting standard that deals with leases under IFRS is IAS 17. IAS 17 was originally issued in September 1982 and was reissued in December 2003. It classifies leases as either finance leases or operating leases. Finance leases make it so that the lessee recognizes an asset and a liability and the lessor recognizes a receivable, basically transferring all the risks and benefits of ownership. Under operating leases, the lessor still recognizes the asset and the lessee recognizes an expense.

Assignment - AFF2491 Company Reporting Semester 1 2013 This assessment task is designed to test a student’s achievement of objectives 1, 2, 3 and 4 (refer to AFF2491 Unit Guide). It is an individual assessment task. This assignment must be handed in for successful completion of this unit. It will contribute 15% towards the final mark in this unit. The assignment consists of: Part B (7 Marks) Accounting for income tax Part C (8 Marks) Consolidation This assignment is due on Friday 10 May 2013 by 5:00pm (Week 9). Students are required to submit a hard copy in the assignment box located at Level 3, Building H, Caulfield Campus.

The first sub-type lease from the standpoint of the lessor is a direct financing lease. To be classified as a

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and whether the arrangement

While working on a consulting engagement, a supervisor in the team has given an assignment. The client is a regional trucking company. A new customer has approached the client with an opportunity that would require 120 trailers—20 more than the trucking company currently owns. The client is uncertain how long the relationship with the customer may last, but the deal has the potential for significant growth. The supervisor has asked a research to be conducted on leases and lease structure issues on the Financial Accounting Standards Board (FASB) website, in particular the current practice and thought related to direct financing, sales type, and operating leases. This paper is a memo addressed to the supervisor that summarizes

This case deals with the public utility company Big Bear Power. Big Bear has decided to lease a combustion turbine from Goliath Co. for a 10-year non-cancelable term. The right to use the turbine begins on January 1st, 2011. Big Bear has presented several different provisions for the lease agreement. It is necessary to determine whether costs and potential costs associated with the provision should be included in “minimum lease payments” as they are defined under ASC 840, Leases. The total amount of minimum lease payments are used as a determinant as to whether the lease should be considered a capital lease. There are several factors to consider in addition to the agreed upon payments when calculating the amount of the

A2: Jack should recognize the $1.2 million as rental expense along with all the other lease payments ratably over the 10 years (lease term of the new agreement). It should initially be accounted for as prepaid lease payments and then be recognized as lease expense over the next 10 years as par. 840-10-35-4 states, “If at any time the lessee and lessor agree to change the provisions of the lease, other than by renewing the lease or extending its term, in a manner that would have resulted in a different classification of the lease under the lease classification criteria in paragraphs 840-10-25-1 and 840-10-25-42 had the changed terms been in effect at lease classification inception, the revised agreement shall be considered as a new agreement over its term, and the criteria in paragraphs 840-1025-1 and 840-10-25-42 shall be applied for purposes of classifying the new lease. Likewise, except when a guarantee or penalty is rendered inoperative as described in paragraphs 840-30-35-8 and 840-30-35-23, any action that extends the lease beyond the expiration of the existing lease term, such as the exercise of a lease renewal option other than those already included in the lease term, shall be considered as a new agreement, which shall be classified according to the guidance in section 840-10-25. Changes in estimates (for example, changes in estimates of the economic life or of

Lease financing is a contractual relationship formed between a lessor, lessee and a supplier. The lessor buys goods from the supplier and rents the goods to a lessee who is given the right to possession of the good for a specified amount of time. This turns into a financing situation, since the lessee owes a debt to the lessor for purchasing the goods on behalf of the lessee . The lessor will usually benefit from an interest rate percentage that is collected from the lessee in exchange for financing the goods. Article 2A of the U.C.C is dedicated completely towards the true leasing of goods (Clarkson, 2015, p.383). Although the rules governing the leasing of goods is similar to the sale of goods covered in Article 2, Article 2A specific contract rules pertaining to leasing relationships. Under Aricle 2A-407, the lessee’s obligations to the finance contract are irrevocable and separate from the obligations of the financer. The lessee is obligated to make payments regardless if the equipment’s ends up defective and must refer to the supplier for relief of the defective product(Clarkson, 2015, p.). For example, a Bank purchases equipment and leases it to ABC Corp. The equipment later turns out to be defective and ABC Corp. stops making lease payments. The bank will be able to sue ABC Corp. because under Article 2A, payments are due regardless of the equipment condition.

The building’s costs come from hard costs which include the construction of the different areas within the building, and soft costs that include insurance payments, legal fees, and payment to consultants (see Appendix A for breakdown of all land and building costs). Leasehold improvements are also part of the project’s total cost. They include renovations or improvements to rentable spaces such as shelves, carpeting and air conditioners based on the tenant’s needs. Leasehold improvements will be depreciated over the span of ten years using the straight line method of depreciation with the half year rule in effect during the first year. Consequently, depreciation expense will only be $90,000 during the first year (see Appendix E for full schedule). The property will require twenty two months of preparation prior to it being ready for rental. The Land will initially be purchased for a value of $2M, and will be financed at a rate of 9.75% per annum compounded monthly (see Appendix B for effective annual rate). Fifteen months following the purchase of the land, construction of the building will begin and is projected to last seven months. The construction costs will be financed at 8.25% per annum compounded monthly, with 55% paid upfront and the remainder upon completion of the building (see Appendix B for effective

Cotton, B., McCarthy, M.G., & Schneider, D.K. (2012). A METHODOLOGICAL FRAMEWORK FOR EXAMINING INFORMATION CONTENT OF PROPOSED LEASE ACCOUNTING RULE. Journal of Theoretical Accounting Research, Fall 2012, Vol. 8 Issue 1, 113-127.

A bargain purchase option (BPO) is a provision in the lease contract that gives the lessee the option of purchasing the leased asset at a bargain price. It is defined as a price much lower than the expected fair value of the asset. Only when it becomes exercisable, than the option appears reasonably assured at the beginning of the lease. This is hard to practice because it is necessary to make a judgment now about whether future option price will be a bargain. (Spiceland, Sepe, Nelson, 2005, Ch 15 pg.. 715) (FASB ASC par. 840-10-25-1)

Moreover, a common description of the lessee’s leasing arrangements includes, but is not limited to the premises for determining the expected rent; the existence and terms of renewal or purchase terms and escalation clauses; and Restrictions by rental arrangements, such as dividends, additional and further leases (AASB 2009, p.20-21).

leased asset have been transferred from the lessor to the lessee. Under EAS, the leased asset is recognized in the lessor