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Sept/Dec 2021 Lease vs Buy Section C

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Sept/Dec 2021 Lease vs Buy Section C

  • This topic has 4 replies, 2 voices, and was last updated 7 months ago by John Moffat.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
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  • June 8, 2022 at 10:24 am #657898
    Anonymous
    Inactive
    • Topics: 29
    • Replies: 39
    • ☆☆

    Sir, when they say the new machine leads to savings in running costs of 2000, wouldn’t that be relevant and there would be a additional tax for both lease and buy?

    June 8, 2022 at 3:10 pm #657945
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51543
    • ☆☆☆☆☆

    By all means bring in the 2,000 saving (you would not lose any marks), but it would not affect the decision as to whether to lease or buy because the saving (and the tax effect) will be the same in both cases. It just means a bit of extra work 🙂

    June 8, 2022 at 4:17 pm #657953
    Anonymous
    Inactive
    • Topics: 29
    • Replies: 39
    • ☆☆

    If the question were to say maintenance cost is undertaken by the lessor at no additional cost, would we count that as a saving under lease?

    June 8, 2022 at 8:02 pm #657987
    Anonymous
    Inactive
    • Topics: 29
    • Replies: 39
    • ☆☆

    *I mean why would we not count that as a saving under lease?

    June 9, 2022 at 8:03 am #658037
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51543
    • ☆☆☆☆☆

    You could either show it as a saving when leasing, or instead as an extra cost of buying. Either would result in the same decision.

    (But obviously that is not the case in this particular question)

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