Case Study Essay Example | Topics and Well Written Essays - 500 words - 28

Case Study - Essay Example3. The measuring rod deducted apiece year towards depreciation on the machine is the income source from which the cost of lease is recovered. Therefore, the term of lease is live to the period in which the value of the machine becomes zero.Minimum lease payment made on each(prenominal) due date is inclusive of principal as well as inte stop. Interest, is calculated, with respect to the diminishing commensurateness of debt, at the same fixed rate as that at which borderline lease payment was discounted. disbursal incurred under such costs as insurance, maintenance and taxes is shown under appropriate head in accretion or deferral accounts.In the balance sheet, the asset figures as a fixed asset with a title like Leased Equipment under Capital Lease. An equivalent liability, by way of the amount paid towards lease, is intercommunicate with a title like Lease Liability. Amount paid on the principal in the following year falls under the current part of the liability and the rest under the non-current part.4. The present value of liability should eventually equal the aggregate of minimum lease payments projected by the lessee in the balance sheets during the following five (or less as the case may be) fiscal years from the time the lease agreement is enforced.1. For Breton, the lessor, the lease arrangement is of direct financing nature. In the transaction, in that respect is no mention of any such thing as dealers profit or manufacturers profit. Discounted present value of minimum lease payment is more than 90 per cent of the asset value at the time of commencement of lease. No problems are predicted in connection with the collectability of minimum lease payments. Nor are there any dead costs deemed to have to be borne by the lessor.2. It is authorization for Breton, the lessor, to document a Lease Receivable. The present value of minimum lease payments as well as the present