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TULSIAN Ltd has initiated a lease for 3 years in respect of a machinery costing 6,00,000 with expected useful life of 5 years. Machinery would revert to TULSIAN Ltd under the lease agreement. The unguaranteed residual value of the machinery after the expiry of the lease term is estimated at ?? 80,000. The implicit rate of interest is 8%. The annual payments have been determined in such a way that the present value of the lease payment plus the residual value is equal to the cost of machinery. Annual lease payments are made at the end of each accounting year (PV of 1 @ 8% for 3 years is 0.9259, 0.8573, 0.7938 respectively). The unearned finance income is

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The syllabus (with weightage):
A. GAAP and Accounting Standards 20%
B. Accounting of Business Combinations & Restructuring 20%
C. Consolidated Financial Statements 20%
D. Developments in Financial Reporting 25%
E. Government Accounting in India 15%


TULSIAN Ltd has initiated a lease for 3 years in respect of a machinery costing 6,00,000 with expected useful life of 5 years. Machinery would revert to TULSIAN Ltd under the lease agreement. The unguaranteed residual value of the machinery after the expiry of the lease term is estimated at ?? 80,000. The implicit rate of interest is 8%. The annual payments have been determined in such a way that the present value of the lease payment plus the residual value is equal to the cost of machinery. Annual lease payments are made at the end of each accounting year (PV of 1 @ 8% for 3 years is 0.9259, 0.8573, 0.7938 respectively). The unearned finance income is






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