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Finance lease

This topic has 1 reply, 2 voices, and was last updated 8 years ago by MikeLittle.

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May 31, 2017 at 12:43 am #389117
Arooba
Member
- Topics: 58
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In one of the mcqs it says that charging the rental payments for an item of plant to the statement of profit or loss where the rental agreement meets the criteria for a finance lease is not faithful representation.Could you tell me why?
May 31, 2017 at 8:17 am #389142
MikeLittle
Keymaster
- Topics: 27
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Because lease payments under a finance lease are not to be expensed through the statement of profit or loss. These payments are a reduction of the obligation to the lessor and they are, therefore, not payments to be expensed
OK?
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