20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for December 2024 exams.
Get your discount code >>

Lease term and depreciation

This topic has 1 reply, 2 voices, and was last updated 4 years ago by P2-D2.

Viewing 2 posts - 1 through 2 (of 2 total)

Author
Posts
April 7, 2020 at 2:06 am #566695
ellekurowa
Member
- Topics: 3
- Replies: 0
For lessees, if they can rent the asset for 3 years and they can continue to lease the asset for a nominal $1 rent per year indefinitely after that and the lessee plans to use the asset for 4 years, then does the right of use asset be depreciated by 3 or 4 years in the lessee books?
April 8, 2020 at 8:08 pm #566879
P2-D2
Keymaster
- Topics: 4
- Replies: 7065
Hi,
It is depreciated over the shorter of the lease term and useful life. Here the lease term is indefinite as they would take up the $1 rental option, and the useful life is 4 years. Therefore it is depreciated over the 4 years.
Thanks
Author
Posts

Viewing 2 posts - 1 through 2 (of 2 total)

You must be logged in to reply to this topic.