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SP > FV
SP $10 CV $12 FV $15what are the entries are these correct?
DR cash 10
CR PPE 12
DR loss 2
Recognise $3 automaticallyloss deferred over the lease term
also:
SP > FV
SP $13 CV $8 FV $10
DR cash 13
CR PPE 8
CR Gain 5
Deferred gain over term of lease
$2 gain recognise automaticallywe don not have to do anything with $2 is this right? but we have to defer the gain $5 over lease term?
Kerri, the three situations are covered in the course notes together with answers on the same page so that you don’t need to skip backwards and forwards from the chapter to the solutions
Check out the course notes and see whether your solution is in line with the notes
Thanks
I have printed these notes out but it doesn’t really tell you if the gain is recognised automically
Your first scenario is as shown:
“SP > FV
SP $10 CV $12 FV $15”Do you see an inconsistency here?
Your second scenario seems to me to involve a loan element in the selling price in which case you need to split the lease payments into lease interest and loan interest.
Again, there is an example in the course notes together with detailed calculations
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