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finance lease: needing clairity and answer

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › finance lease: needing clairity and answer

  • This topic has 4 replies, 4 voices, and was last updated 8 years ago by MikeLittle.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • May 26, 2013 at 11:43 am #127212
    kudachikanza
    Member
    • Topics: 2
    • Replies: 10
    • ☆

    Lassie acquired an asset under a finance lease arrangement, committing to pay five fixed annual instalments of $20,000 payable in arrears. The cash value of the asset in an outright sale would have amounted to $75,000. What is the lease interest expense to be recognised by Lassie in the third year of the contract?

    May 26, 2013 at 3:51 pm #127238
    captmario
    Member
    • Topics: 59
    • Replies: 165
    • ☆☆☆

    What is the rate of interest?

    May 27, 2013 at 10:57 am #127312
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23333
    • ☆☆☆☆☆

    We need to know the answer to CaptMario’s question – what is the rate of interest implicit in the lease

    October 23, 2016 at 1:27 pm #345691
    sichale
    Member
    • Topics: 0
    • Replies: 1
    • ☆

    $5146

    October 23, 2016 at 5:11 pm #345716
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23333
    • ☆☆☆☆☆

    It looks to me, just a guess, that the rate of interest is 11.196412% and, if that estimate is correct, the interest expense in the third year would be $4,973.70

    But I could be wrong

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