Lessee Accounting rate 12% LESSEE BOOKS AT THE

n 5
Rentals 1238.44
Lease term = Economic life FMV 5000
PV of MLP 5000.01
Lease Amortization Schedule
Date Principal Begning Annual Rentals Interest @12% Principal
1/1/2005 5000.00 1238.44 0.00 1238.44
1/1/2006 3761.56 1238.44 451.39 787.05
1/1/2007 2974.51 1238.44 356.94 881.50
1/1/2008 2093.01 1238.44 251.16 987.28
1/1/2009 1105.73 1238.44 132.69 1105.75
6192.2 1192.18

In Lessee Books (Journal Entries)

Date Description Dr Cr
1/1/2005 Asset under finance lease 5000
Liability under finance lease 5000

1/1/2005 Liability under finance lease 1238.44

Cash 1238.44

31/12/2005 Interest Expense 451.39

Interest Payable 451.39

31/12/2005 Depreciation Expense 1000

Accumulated Depreciation 1000
1/1/2006 Interest Payable 451.39
Liability under finance lease 787.05
Cash 1238.44

31/12/2006 Interest Expense 356.94

Interest Payable 356.94

31/12/2006 Depreciation Expense 1000

Accumulated Depreciation 1000
LESSEE BOOKS AT THE BEGINNING OF THE YEAR(ANNUITY DUE)

Principal at end
3761.56
2974.5072
2093.008064
1105.72903168
0

Balance Sheet at 31-12-2005

Assets
Asset under finance lease 5000
Less: Acc-Depreciation 1000
NBV 4000
Liabilities
Current Liabilities
Interest Payable 451.39
Liability under finance lease 787.05
1238.44
Non-Currect Liabilites
Liability under finance lease 2974.507
4212.947

Comparasion of year wise charge tp P&L

Finance Lease Operating Lease
Year Depreciation Interest Total Lease Rent Expense
2005 1000 451.39 1451.39 1238.44
2006 1000 356.94 1356.94 1238.44
2007 1000 251.16 1251.16 1238.44
2008 1000 132.69 1132.69 1238.44
2009 1000 0 1000.00 1238.44
5000 1192.18 6192.18 6192.2
Lessee Accounting LESSEE BOOKS AT THE END OF T

LT (n) 5 Date Principal Beg

r 16% 31/12/98 1000000
LRP 305409 end of year 31/12/99 854591
FMV 1000000 31/12/00 685916.56
31/12/01 490254.2096

PV MLP 1000000 pmt(1-(1/(1+i)^n/i)) Ordinary 31/12/02 263285.88314

pmt(1-(1/(1+i)^n/i))*(1+i) Due

Date Description Dr Cr
1/1/1998 Asset under finance lease 1000000
Liability under finance lease 1000000

31/12/98 Liability under finance lease 305409

Cash 305409

31/12/98 Depreciation Expense 200000

Accumulated Depreciation 200000
31/12/99 Liability under finance lease 305409
Cash 305409

31/12/98 Depreciation Expense 200000

Accumulated Depreciation 200000
SEE BOOKS AT THE END OF THE YEAR(ANNUITY ORDINARY
Finance Charge Allocation Schedule
Annual Rentals Interest @ 16% Principal portion of LR Principal at end
305409 160000 145409 854591
305409 136734.6 168674.4 685916.6
305409 109746.6 195662.4 490254.2
305409 78440.7 226968.3 263285.9

305409 42125.7 263283.3 0.0

1527045 527047.6244378

Statement of Financial Position

for the year ended 31-12-1998
Assets
Asset under FL 1000000
Less: Acc-Depreciation 200000
NBV 800000

Liabilities
Current Liabilities
Liability under finance lease 168674.4

Non-Current Liabilities
Liability under finance lease 685916.6
Lessee Accounting LESSEE WITH BARGAIN PURCHA
PV of MLP = PV of LR + PV of BPO
LR 8247.42 Beg of year Lease Am
LT (n) 5 PV of LR 33297.72 Year Principal Beg
r 12% PV of BPO 1702.28057 1/4/2001 35000
FMV 35000 PV MLP 35000 1/4/2002 26752.58
BPO 3000 1/4/2003 21715.4696
1/4/2004 16073.905952
PV = FV/(1+i)^n 1/4/2005 9755.3546662
31/3/2006 2678.5772262

b) Journal Entries for 2 Years

Date Description Dr Cr
1/4/2001 Asset under FL 35000 c
Liability under FL 35000

1/4/2001 Liability under FL 8247.42

Cash 8247.42

31/12/2001 Interest Expense 2407.7322

Interest Payable 2407.732

31/12/2001 Depreciation Expense 3281.25

Accumulated Depreciation 3281.25
1/4/2002 Interest Expense 802.58 d)
Interest Payable 2407.7322
Liability under FL 5037.11
Cash 8247.42

31/12/2002 Interest Expense 1954.395

Interest Payable 1954.40

31/12/2002 Depreciation Expense 4375

Accumulated Depreciation 4375
SEE WITH BARGAIN PURCHASE OFFER WITH BEGINNING YEAR WITH FRACTIONAL MONTHS

Lease Amortization Schedule

Rentals Interest @ 12% Princial LR Principal at the end of year
8247.42 0.00 8247.4 26752.6
8247.42 3210.31 5037.1 21715.5
8247.42 2605.86 5641.6 16073.9
8247.42 1928.87 6318.6 9755.4
8247.42 1170.64 7076.8 2678.6
3000 321.43 2678.6 0.0
44237.1 9237.11

Statement of Profit & Loss Extracts

Interest Expense
Year ended Dec 31 Jan-March Apr-Dec Total Expense for the year
2001 0 2407.7325 2407.7325
2002 802.58 1954.392264 2756.97
2003 651.464088 1446.6515357 2098.11562368
2004 482.21717856 877.98191996 1360.1990985216
2005 292.6606399872 241.07195036 533.732590344193
2006 80.35731678566 0 80.3573167856641
9237.10679333146

Statement of Financial Position for the year ended 31-12

2001 2002
Assets
Asset under FL 35000 35000
Less: Acc-Dep 3281.25 7656.25
NBV 31718.75 27343.75

Liabilities
Current Liabilities
Interest Payable 2407.7322 1954.395
Liability under FL 5037.11 5641.6
Total CL 7444.84 7596.0

Long term liabilities

Liability under finance lease 21715.5 16073.9
Lessee Accounting
Application of SYDM for the calculation of Interest Charge Calcualtion of finance/interest charg

LT 8 Years Fraction
FMV 72000 1 7
Life 8 2 6
Rental Pmt 12269 3 5
r 10% 4 4
5 3
PV MLP 72000 6 2
Minimum LP 98152 LRPP x LT 7 1
interest charge/Finan 26152 8 0
28

SYDM = No of years (time period) left upto Year Zero x Total Intere

sum of digit method at the beginnin

n of finance/interest charges through SYGM
Lease Amortization Schedule
interest/finance charges Year Principal beg Annual Rentals Interest
6538.09 1 72000 12269
5604.08 2 59731 12269 6538.09
4670.07 3 54000.092381 12269 5604.08
3736.05 4 47335.171566 12269 4670.07
2802.04 5 39736.237552 12269 3736.05
1868.03 6 31203.290342 12269 2802.04
934.01 7 21736.329934 12269 1868.03
0.00 8 11335.356328 12269 934.01
26152.37 98152 26152.37

pto Year Zero x Total Interest / Fractional Years

git method at the beginning of year

ortization Schedule
Princiapl portion of LR Principal end
12269.00 59731.0
5730.91 54000.1
6664.92 47335.2
7598.93 39736.2
8532.95 31203.3
9466.96 21736.3
10400.97 11335.4
11334.99 0.4
Lease term 4
Rentals 13000 end of year
Insurance 500 Time Prinicpal Beg
Useful Life 4 31/12/2005 34376.93
RR 20% 31/12/2006 28252.31
FMV 36000 31/12/2007 20902.78
GRV 1500 31/12/2008 12083.33

PV of MLP
PV of AR 33653.55 pmt(1-(1/(1+i)^n/i)) a

PV of GRV 723.37963 FV/(1+i)^n

Total 34376.93

PV MLP 34376.93
Less: RV 1500
32876.93
4
Dep 8219.23225

resdiual value with end of year

 Lease Amortization Schedule
Rentals Interest Principal portion of rentals Principal at end
13000 6875.39 6124.61 28252.31
13000 5650.463 7349.53703703704 20902.78
13000 4180.5556 8819.44444444444 12083.33
13000 2416.6667 10583.3333333333 1500.00
52000 19123.07

Journal Entries
Asset under FL 34376.93
Liability under FL 34376.93

Depreication Expense 8219.232253086

Accumulated Depreciation 8219.23225309

Year Interest Depreciation Insurance Total Expense

2005 6875.39 8219.23 500 15594.62
2006 5650.46 8219.23 500 14369.69
2007 4180.55 8219.23 500 12899.78
2008 2416.66 8219.23 500 11135.89
year end 30-Jun Lease Amortizati
lease term 5 Years Principal Beg
r 8.1442% 31/12/2002 200000
Rentals 30000 semi annual 30/6/2003 186288.4
FMV 200000 31/12/2003 171460.09987
PV MLP 200000 30/6/2004 155424.15333
31/12/2004 138082.20722
PVIFA 6.6666 1-1/(1+i)^n/i 30/6/2005 119327.89834
AR 30000 31/12/2005 99046.201039
30/6/2006 77112.721744
PV MLP 200000 31/12/2006 53392.936029
30/6/2007 27741.363525

Balance Sheet
30/6/2003
Current Laibilities
liability under FL 33377.892651

Non-Cuurent Liab
Liability under FL 138082.20722
TL 171460.09987

SEMI ANNUALLY RENTAL AT THE END OF YEAR

Lease Amortization Schedule
Rentals Interest PPAR Principal at end
30000 16288.4 13711.6 186288.4
30000 15171.7 14828.3 171460.0998728
30000 13964.05 16035.95 155424.1533266
30000 12658.05 17341.95 138082.2072219
30000 11245.69 18754.31 119327.8983424
30000 9718.303 20281.7 99046.20103924
30000 8066.521 21933.48 77112.72174427
30000 6280.214 23719.79 53392.93602857
30000 4348.427 25651.57 27741.36352461
30000 2259.312 27740.69 0

2003
30/6/200430/6/200530/6/2006 Assets
AUFL 200000
39036.01 45653.27 53392.26 Less: AD 40000
NBV 160000

99046.2 53392.94 0
138082.2 99046.2 53392.26
Books of lessor

LT 5
AR 1238.44 Begning
UL 5
r 12%
FMV 5000

Gross investment in lease = MLP + Unguranteed RV

MLP 6192.2
UGRV 0
Gross inv in lease 6192.2 Years
PV MLP 5000 1/1/2005
unearned finance income 1192.2 1/1/2006
1/1/2007
1/1/2008
1/1/2009

In the books of lessor

Lessor Balance Sheet
1/1/2005
Current Assets
Net investment in FL 787.05
Interest receivable 451.38
1238.43 1/1/2005

Non-Current Assets
Net investment in FL 2974.5 31/12/2005

1/1/2006

Notes to Accounts
MRP/MLP 4953.76 31/12/2006
Add: RV 0
Subtotal 4953.76
Less: unearned finance income 740.82
4212.94
Less: current portion 787.05
3425.89
 LESSOR BOOKS AT THE BEGINNING OF THE YEAR(ANNUITY DUE)

MLP = Lease rentals x lease term

Lease Amortization Schedule

Investment at beg Rentals Interest investment recovery
5000 1238.44 0 1238.44
3761.56 1238.44 451.3872 787.0528
2974.5072 1238.44 356.9409 881.499136
2093.008064 1238.44 251.161 987.27903232
1105.72903168 1238.44 132.6875 1105.7525161984
1192.177
the books of lessor

Lease payment receivable 6192.2

Asset under FL 5000
Unearned finance income 1192.2

Cash 1238.44
Lease payment receivables 1238.44

Unearned finance income 451.38

Finance income 451.38

Cash 1238.44
Lease payment receivables 1238.44

Unearned finance income 356.94

Finance income 356.94
investment at end
3761.56
2974.5072
2093.008064
1105.72903168
0
Books of lessor

LT 5
AR 74369.35 Begning
UL 5
r 25%
FMV 200000

Gross investment in lease = MLP + Unguranteed RV

MLP 371846.8
UGRV 0 Lease Amortization Schedule
Gross inv in lease 371846.8 Years
PV MLP 200000 31/12/2001
unearned finance income 171846.7 31/12/2002
31/12/2003
31/12/2004
31/12/2005

In the books of lessor

Lessor Balance Sheet
1/1/2005
Current Assets 2001 2002
Net investment in FL 30461.69 38077.11

31/12/05

Non-Current Assets
Net investment in FL 145169 107092
175631 145169

31/12/2006

Notes to Accounts
MRP/MLP 4953.76
Add: RV 0
Subtotal 4953.76
Less: unearned finance income 740.82
4212.94
Less: current portion 787.05
3425.89
 LESSOR BOOKS AT THE END OF THE YEAR(ORDINARY ANNUITY )

MLP = Lease rentals x lease term

ase Amortization Schedule

Investment at beg Rentals Interest investment recovery
200000 74369.35 50000.001392 24369.348608
175631 74369.35 43907.66424 30461.68576
145169 74369.35 36292.2428 38077.1072
107092 74369.35 26772.966 47596.384
59495 74369.35 14873.87 59495.48

the books of lessor

Lease payment receivable 371846.75

Asset under FL 200000
Unearned finance income 171847

Cash 74369.35
Lease payment receivables 74369.35

Cash 74369.35
Lease payment receivables 74369.35
investment at end
175631
145169
107092
59495
0