Leasing System Features The features of the rental-purchase system are similar to those of private leases, which give the tenant the ability to purchase at any time during the agreement, for example.B. Like rent, rental purchases can benefit consumers with bad credit by spreading the cost of expensive items that they could not afford over a long period of time. However, this is not the same as a credit extension, since the buyer technically only owns the item once all payments have been made. AB Transport Company purchased a truck from XY Automobiles Ltd. in January 2001 on the leasing system. The cash price of the truck was 3.20,000 Rs. which, as under: A lease-sale can flatter a company`s return on invested capital (ROCE) and return on assets (ROA). This is because the company does not need to use so much debt to pay assets. To be valid, HP agreements must be written and signed by both parties. You must clearly state the following information in an impression that everyone can read effortlessly: Example-1 (Interest Calculation) In April 2005, Mr.
X purchased a “motor truck” from M/s Y-Co. in the rental purchase system, 5,000 Rs are paid on delivery and the balance will be paid in five annual tranches of Rs 7,500 on March 31 of each year. The cash price of the truck is 37,500 aff. and sellers charge interest of 5 per cent per annum on annual balances. Find out how much capital and interest are included in each tranche. 1.1 Introduction 1.2 Goals 1.3 Meaning and Concept of The Leasing System 1.4 Rental-Purchase System Features 1.5 Difference between the Rental Purchase System and the Staggered Payment System 1.6 Accounting Entries in The Landlord`s Books 1.7 Accounting Entries in the Rental Seller`s Books 1.8 Cash Price Calculation, Cash Price Calculation, if the cash price is not given 1.9 Calculation of the amount of interest, if the interest rate is not given 1.10 Somme up to 1.11 Home Assignments 1.12 Other readings 1.13 Response to saq`s staggered payment system is the system of buying and selling goods, in which the title is immediately transferred to the buyer at the time of the sale of the goods and the sale price of the goods is paid in increments. If a tranche is late, the seller is not allowed to take back the property from the buyer`s property. He may take legal action to recover the remaining balance due to the price of the goods sold.
The following differences are between the rental-sale system and the staggered payment system: Under Total Assets Value Method: Under this method of accounting in the tenant`s books, ownership of the asset is also transferred to the buyer when the goods are delivered. The following entries are recorded in this method.