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Situation: A company entered into a non-concellable contract for a machine for a period of 5 years. The machine cost was 100,000 with a life of 10 years with no residual value. Annual payment of 23,000 were to be made on 31/e 12 and 23,539 at the and of year 5 when ownership transfers to the company
Question: if money were borrowed, how would we calculate the capitalisation of the finace charge in respect of finance lease. Imagine that general borrowings outstanding through the year were 7.5%bank loan - 800,000 and 8.5% loan stock - 200,000.
Question: if money were borrowed, how would we calculate the capitalisation of the finace charge in respect of finance lease. Imagine that general borrowings outstanding through the year were 7.5%bank loan - 800,000 and 8.5% loan stock - 200,000.