Accounting for Finance Lease: Lessee's Perspective Example. CPA Exam

In this session, I discuss avvounting for a finance lease from a lessee's perspective including example and journal entries.
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[@trumnq]

Thanks for the explanation. It's very useful. I just link the IAS 40 and IFRS 16, and I am wondering whether the ROU asset can be revalued under fair value model or no? For example, the land lease from Industrial park with annual lease payment.

[@prapspartner5968]

Did we add the cost of transporting the asset to the right use of asset?

[@mohdsaafin1411]

Sir Hope you are doing well Can you explain to me how we achieve present value factor 4.62

[@iansande748]

I got 4.45. What did you get?

[@Nancy4606]

​@@iansande748 i am also 4.45, maybe 4.62 is wrong.

[@9OO.]

​​@@Nancy4606It's not wrong, remember it's an annuity due so there's no interest on the first payment as they paid it on the first day. So it would just be 20,000 plus the present value of the payments using 4 years instead of 5. (The first year is the 20k that I added first)

[@lindama4304]

Yes, I also want to know how to achieve PVF at 4.62. According to the formula, the PVF should be 1/[1+(1+4%)^5] =0.82, right? Pls advise, thanks!

[@wedgerut]

There is a typo in the description

[@LubabaMaha-A]

Sir pls help me....how to prepare lessor balance sheet and lessee income statement

[@ariannashahin1995]

What happens if you meet more than one of the tests for determining the life to amortize over?

[@royaldinesh61]

Didn't get your question

[@LubabaMaha-A]

Pls anyone help me...what will be the journal entry for yr 2025...??