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
Valuation - Auditing Process IAS 16 requires that all assets for use through the business have been valued on the basis of depreciated historic costs along with one exception.

Communication with the expert If the auditor intends to use the work of an expert then he must communicate with the expert well in advance to confirm the terms of engagement an

Long Term Contracts - Audit Process The authoritative document with reference to long term contracts is IAS 11: Construction Contracts and IAS 18: Revenue Recognition, and ISA

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

Examples of Liabilities Examples of those liabilities are: a) Claims by employees for injury at work such should be covered through workman's compensation; b) Claims thr


Problem: (a) Your client has sought your advise on the procedures to be adopted for carrying out the stocktaking which is based on a year-end count. You are required to prepa

Need for an Audit Whether you take an example for a modern large liability company, such we can clearly differentiate between those who control those funds the providers of fu

Work In Progress What such applies to goods for resale applies uniformly to work in progress even when the items present greater problems of valuation and ascertainment to the

Audit Reports - Going Concern In the vast widely of cases, the going to relate assumption is suitable and whether applied no mention require be made in the auditor's report.