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I’ve posted this under the relevant lecture but that seems not to be the right place so I am now posting it here as well.
In both the new and the old notes and lectures it says that the lessee should depreciate the leased asset (when it is a finance lease) over the shorter of the lease term and the useful life of the asset.
But paragraphs 27 and 28 of IAS 17 state that this is the case only when there is “no reasonable certainty that the lessee will obtain ownership by the end of the lease term”.
Paragraph 28 specifies that where such reasonable certainty exists the leased asset should be depreciated over its useful life – this is not mentioned in the lecture.
Is what paragraph 28 of IAS 17 says still applicable? Do we have to consider if there is reasonable certainty that the lessee will obtain ownership by the end of the lease term or the lessee must always depreciate the leased asset over the shorter of the lease term and the estimated useful life?
Thank you.
Hi,
I don’t have the time to go through every lecture on a regular basis to see if students have posted questions there sorry. If you have any questions in the future then please post them here.
Yes paragraph 28 is correct and relevant but from an exam perspective isn’t too exciting really as it just means we apply our usual depreciation policy, hence the focus on the other paragraph.
Thanks
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