Issues for finance leases, Auditing

Issues for Finance Leases

For the leases such have been categorize as finance leases, a model uses to be checked for the following issues:

(i) Check technique used to split capital and interest

(ii) Check the technique is appropriately applied to lease payments

(iii) Check reduction which is based on the shorter of the lease term and the needful life of the asset to the lessee.

In addition 'normal' audit tests verification of the asset as for many non current assets. Whether the lease has been classified as an operating lease, then a check is required of the manner in which the rentals have been charged to the income statement.  A check should be made on the physical existence also of the asset whether at the time of the audit the lease is still in existence.

Finally regard should be made to the possibility of assets being held within leases also being shown in normal noncurrent assets in the balance sheet.  This is principally relevant to operating leases whether the existence of a physical asset at the balance sheet date have to be required to support the inclusion of the asset in the non current asset account.

Posted Date: 1/25/2013 1:54:03 AM | Location : United States







Related Discussions:- Issues for finance leases, Assignment Help, Ask Question on Issues for finance leases, Get Answer, Expert's Help, Issues for finance leases Discussions

Write discussion on Issues for finance leases
Your posts are moderated
Related Questions
Existence of Debtors - Audit Process The easiest technique to establish the existence of a debtor is to enquire the debtor if he exists. This is done through use of a practice

Existence - Plant and Machinery However this should generally be checked through physical inspection, so a problem arises.  Items of machinery and plant can be numerous mobile

Describe the factors which decide the broad area of Scientific activity?

Financial Statements Rely All Financial providers people must be sure that the financial statements can be relied upon. It should be noted that: 1. The auditor himself must be

How do internal auditors add to the credibility of financial statements?

Recording the Audit - ISA 230 Purpose of working papers It is necessary which all audit work is documented - the working papers are the tangible evidence of the work co

Deferred Taxation - Audit Process Deferred Taxation results from the fact such the income tax department require different rules for calculating profits from those used throug


Classification of Management Representations The thing to note is which during the course of the audit the auditor obtains various representations from the management which ca