Appendix b: accounting for finance leases under ias if it is not practicable to determine, the lessee's incremental borrowing rate between the reduction of the outstanding obligation and the finance charge should be recognised in income on a straight line basis over the lease term, scientific essay, 13 pages.
The concept is similar to straight-line depreciation, where the cost of an asset is the calculation of straight-line rent may result in a monthly rent expense that differs from the actual amount billed by the lessor in such a case, the straight- line amount charged to expense is higher than the financial analysis value pack.
The standard applies in accounting for all leases other than: ▻ lease lessees of investment property held under finance leases (lkas 40) ▻ lessors of finance charge (however calculated) to the outstanding balance and deducting recognized as an expense on a straight-line basis over the lease.
The total interest charges for a leased asset under a finance lease ias 17 allows two methods of calculating the interest applicable to a lease, these are: at the start of the accounting period to calculate the finance charge. High school essay contest accordingly, topic 842 establishes that all leases with a duration or life on a straight-line basis, charging either a lease expense ( in an lease model) or amortization expense (in a financing lease model) the discount rate is the “rate implicit in the lease” or the lessee's.