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Here do we have to take lease as expense in profit and loss intead of asset because of the lease agreement being in small amount even though it is for a period of two years?
This is a two-year agreement, commencing on 1 July 20X5, for 10 computer tablets to be used by senior management. The purchase price of each tablet is $1,000. Blocks Co will make 24 monthly payments of $550 and legally own the tablets when the final payment has been made. The present value of the future cash flows is $11,000.
For agreement two, what amount of asset should be initially recognised on the commencement of the lease?
The Answer is
Yes, this is a low value asset and so a simple expense through profit or loss each year. The additional information in the question is trying to confuse things within the question.
Thanks a lot Sir.