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Hi Mike Little,
In this Lease “example 1″ video, the depreciation is charged for 4 years but in the notes (answer pg. 218) it is charging depreciation for 5 years.
Which one is to be correct?
Thank you in advance
I don’t have the notes available and I cannot face the prospect of listening to myself on the recording.
The correct period is “over the shorter time of the lease term and the estimated useful life of the asset”
Clearly I have made a mistake in either the recording or in the notes but hopefully this “explanation” should help you to determine which is the correct period over which the asset should be depreciated.
Is that enough?
( and thank you for pointing out the inconsistency / error! )
@MikeLittle, I agree with the recording – Depreciation: 4 years.
Thank you once again.
@zainy52, You’re welcome, and thanks again for pointing it out to me
in the cash flow statement you are saying we have 3000 under Financing activities. Here you mean the payment of the deposit and not the 1st repayment – am I correct?
i think what On Kei CHUNG is trying to say is in the downloadable answers, the useful life is still like this one 4 years. despite this, the depreciation is calculated dividing by 5, when in this video mike divides by 4. What is the correct method to do it? thanks in advance.
In example one why the prof use different years in his calculations, he started with 1.1.05 to 1.1.09 does him means 2005-2009?is there any meaning? because the qn shows that it is from jan 2010…
It’s possible that notes have updated dates
But the lecture uses notes before the update
@admin, Please check this to clarify. Notes that I have (recently downloaded) says lease commences Jan 2011, while video says 2005.
Video was probably done with previously updated notes.
video says 2005? that’s an error. opentuition did not exist in 2005.. video is probably older (2011 or 2010) than the notes, but still OK
just want to check if the lease term on example 1 should be 5 years? (with 4 annual payment + deposit) as shown in the answer?
The question says its 4 annual payments commencing 1Jan 2011. The deposit of 3000 on 1Jan 2010 is not part of the annual payments but reduces the amount ‘borrowed’ from 13161 to 10161.Therefore liability is actually 10161 and the payments of 3000 effectively start Jan 2011. I dont know if this makes sense to you. Am not sure, that is how I interpreted Question
why was d initial instalment of 3000 nt charged to d income stmt..
Because it is like a deposit. In substance it is like borrowing 13161-3000= 10161. I dont know if Mr Little can explain it better if this does not help
sorry 1 had 43 fail i will attend lectures this time/ congrat to those who passed
did u self studied that you got 43 ??
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