BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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FRS 16
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FRS 19
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SSAP 21
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SSAP 20
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Detailed explanation-1: -SSAP 21 prescribes the accounting for: Finance leases, and. Operating leases.
Detailed explanation-2: -Hire purchase is a form of finance. Essentially you have bought the item and used a loan (from the finance company) to pay for it. With HP you are considered the owner of the item immediately, the item appears as an asset on your balance sheet, and the balance owing to the finance company appears as a liability.
Detailed explanation-3: -The lessor reports the lease as a leased asset on the balance sheet and individual lease payments as income on the income and cash flow statements. The lessee reports the lease as both an asset and a liability on the balance sheet due to their stake as a potential owner of the asset and their required payment.