Sir there is a question in kaplan kit in which one of the para of the scenario is that
Lease offer is as follows
Lease will be over 5 years with lease rental payments of $146000 annually in advance. Tax is payable 1 year after accounting year end and corporation tax rate is 25%. Maintenance is payable by lessor and costs $20000 per annum payable at the end of each year, including the last year in preparation for sale the residual value is expected to be $40000 (expected tax written down at end of the lease) and lessor will retain that.
Is the above operating lease or financing lease. Also is operating lease just for 1 year or can it be greater than 1 year?
Ask the Tutor ACCA FM
Operating lease or Financing lease
7y ago#1As far as Paper FM is concerned, it now makes no difference (and an operating lease can certainly be for more than one year).
I explain how to deal with this question in my free lectures on lease versus buy.
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