An asset which could be purchased outright for £383,720 is instead leased by Lessee Ltd for three years at the end of which the asset will have no residual value. The lease provides for half-yearly payments in advance of £72,000, the first payment being made on 1 January 2018. The asset is to be depreciated using the straight line method. 

Required: 

how how the asset will be accounted for in the financial statements for the year ended 2018 under IAS 17 if: 

(i) Lessee Ltd is responsible for all maintenance and insurance costs; 

(ii) Lessee Ltd is not responsible for the maintenance and insurance costs.

Answer rating: 100% (QA)

Answer a i Lessee responsible for Maintenance Insurance Cost It means that all the risk and reward h... View the full answer