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AIOU SOLVED ASSIGNMENT 2 CODE 444 SPRING 2016

SOLVED ASSIGNMENT 2 ADVANCE ACCOUNTING CODE 444 SPRING 2016

Aiou solved assignment 2 code 444 advance accounting for the semester spring 2016 is available for the Open University students of B.Com. This is complete 2nd solved assignment advance accounting code 444 solved by accounting professional.

Q 1:- What do you know about the Hire Purchase system?

Ans. Hire Purchase system: The price under hire purchase system is paid in installments. The goods are delivered in the possession of the purchaser at the time of commencement of the agreement. Hire vendor continuous to be the owner of the goods till the payment of last installment.
Difference between hire purchase and Installment sales:
1. The distinction between the hire purchase system and the installment payment system should now be noted.
2. Under the hire purchase system, the property in the goods sold does not pass to the buyer but remains with the seller until the last installment has been paid.
3. If default is made in payment, the seller can retake possession of the goods.
4. Under the installment payment system, the property in the goods sold passes at once to the buyer, although payment for them is to be spread over a period of years or months.
5. If default is made in payment, the seller cannot retake possession of the foods, he can only sue for the balance of the debt.
6. Goods purchased on the hire system will, therefore, need different treatments in accounts to the one necessary to record a purchase under an installment agreement.

Q 2: Define the term lease and describe the criterion to identify the finance lease.

Ans. Lease: A contract by which one party conveys land, property, services etc, to another for a specified time, usually in return for a periodic payment.
Criterion to identify the finance lease:
Criteria for the Lessee:
At the date of lease agreement, if a lessee meats any one of the following criteria, it is classified as capital lease. If none of the criteria below is met, the lease is classified as operating lease:-
1. The lease agreement transfers ownership of the property to the lessee by the end of the lease term.
2. The lease contains a bargain purchase option.
3. The lease term is equal to 75 percent or more of the estimated economic life of the leased property. 4. The present value of these minimum lease payments at the inception of the lease is equal or at least 90% of the market value of the leased asset at that time.

Criteria for the Lessor:-
From the lessor’s point of view a lease is classified as a direct financing or sales type capital lease if all of the following criteria are met, failing which the lease will be classified as operating lease.
1. The lease agreement transfers ownership of the property to the lessee by the end of these term.
2. The lease contains a bargain purchase option.
3. The lease term is equal to 75% or more of the estimated economic life of the leased property.
4. The present value of the minimum lease payments at the inception of the lease is equal to at least 90% of the market value of the leased asset at that time.
5. Collectibles of the lease payments is reasonably assured.
6. There are no significant uncertainties related to amount of un-reimbursable cost, yet to be incurred by the lessor under the lease. You might have noticed that the first four conditions are exactly the same for lessee as well as lessor accept if any one of the four constitutions is true it is qualified for capital lease from lessee’s point of view. But all six conditions (including four mentioned for lessee) must he fulfilled to qualify for direct financing or sales-type capital for lessor; otherwise lease is classified as an operating lease.

Course: Advanced Accounting Code: 444 Assignment No: 02 Level: B.Com Spring 2016

Q 3: The following data is available front the financial of Shahbaz Corporation

السَّلآمُ عَلَيْكُمْ وَرَحْمَةُ الله وبَرَكآتُه. Assalam-O-Alaikum, Dear, Students we are providing free of cost solved assignments. Get it & Share it. For More Assignments Stay Connect with us. "DON'T MISS NAMAZ"

3 Comments
  1. Reply
    Zeeshan September 27, 2016 at 1:41 pm

    Kindly upload Qno 5 ans, page 3 plz

  2. Reply
    saba February 24, 2017 at 3:01 pm

    can u please upload autmn 2016 code 444 assignment

    • Reply
      OSCAR February 25, 2017 at 9:08 am

      Beta Already uploaded your required assignment, please revisit and make search in search box.

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