Lease Accounting AS 19 One Shot | Finance vs Operating Lease + Sale & Leaseback | CMA Inter Group 1

Lease Accounting (AS 19) One Shot Revision for CMA Inter Group 1 — Paper 6 Financial Accounting. This video covers the ENTIRE chapter from scratch: meaning of lease, Operating vs Finance Lease (all 5 conditions), accounting in the books of Lessee and Lessor, MLP, GRV, UGRV, Gross Investment, Net Investment, Unearned Finance Income, Implicit Rate (IRR) with interpolation, apportionment tables, and Sale & Leaseback — with fully solved important questions so you can revise the whole chapter before your exam. 📚 What you'll learn in this One Shot: ✔ Meaning of Lease — Lessor, Lessee, right to use, agreed period, consideration ✔ Operating Lease vs Finance Lease — why AS 19 exists ✔ The 5 conditions of Finance Lease (any one is enough): lease period greater than 50% of useful life, bound to purchase, option to purchase, PV of lease payments ≥ fair value, specialised asset ✔ How to classify a lease in the exam and write the reason ✔ Operating Lease accounting — straight-line basis recognition, Lease Equalisation Account ✔ Systematic allocation (units produced) as an exception to straight-line ✔ Key terms: MLP, GRV, UGRV, Gross Investment (GI), Net Investment (NI), Unearned Finance Income (UFI) ✔ Interest rate implicit in the lease (IRR) — trial and error with interpolation ✔ Books of Lessee — recognise asset and liability at lower of PV of MLP and fair value ✔ Table of apportionment — lease payment, finance charge, outstanding liability ✔ Books of Lessor — finance income, net investment and receivable ✔ Sale & Leaseback — finance lease (defer profit) and operating lease (3 situations based on sale price, fair value and book value) ✔ Common mistakes and exam presentation tips 👨‍🏫 Taught by: Abhimanyyu Agarrwal 📖 Course: CMA Intermediate Group 1 📄 Paper: Paper 6 – Financial Accounting 🙋 Frequently Asked Questions: Q1. What is the difference between Operating Lease and Finance Lease? A. A Finance Lease transfers substantially all risks and rewards of ownership to the lessee. Any lease that is not a Finance Lease is an Operating Lease. Q2. What are the conditions for a Finance Lease? A. Any one of: (1) lease period covers the major part (more than 50%) of the asset's useful life, (2) lessee is bound to purchase the asset at the end, (3) lessee has an option to purchase, (4) present value of lease payments equals or exceeds fair value, (5) the asset is of a specialised nature useful only to the lessee. Q3. What is Minimum Lease Payment (MLP)? A. For the lessee, MLP is lease rentals plus Guaranteed Residual Value (GRV). Q4. What is Gross Investment and Net Investment? A. Gross Investment (lessor's view) = MLP + Unguaranteed Residual Value (UGRV). Net Investment is the present value of Gross Investment, which equals the fair value of the asset. Q5. What is Unearned Finance Income? A. Gross Investment minus Net Investment. Q6. At what value does the lessee record a finance-leased asset? A. At the lower of the present value of MLP and the fair value of the asset. Q7. How is operating lease rent recognised in P&L? A. On a straight-line basis over the lease term (or on a systematic basis such as units produced if data is given), with the difference taken to Lease Equalisation Account. Q8. How is profit on Sale and Leaseback treated? A. For a finance lease, the profit is deferred and amortised over the lease term in proportion to depreciation. For an operating lease, profit or loss is recognised immediately if the sale price is equal to or less than fair value; where the sale price exceeds fair value, the excess over fair value is deferred. ⏱ Timestamps: 0:00 Introduction & Meaning of Lease 5:47 Finance Lease — 5 Conditions 17:30 Operating Lease Accounting 28:35 Finance Lease — MLP, GRV, UGRV, GI, NI 49:11 IRR with Interpolation 1:03:01 Books of Lessee 1:18:30 Books of Lessor 1:27:23 Sale & Leaseback 1:37:34 Closing 🔔 Subscribe for more One Shot Revisions of CMA Inter Group 1 & Group 2 — Financial Accounting, Corporate Accounting & more, only on this channel! 📲 Follow for updates: 📚 Join Our CA/ CMA Foundation & Intermediate Classes 👉 Modes: Face-to-Face (Kolkata), Live Online, Google Drive, and Pendrive 📞 𝐖𝐡𝐚𝐭𝐬𝐀𝐩𝐩: / 🌐 𝐕𝐢𝐬𝐢𝐭: ‎🌐 𝐖𝐡𝐚𝐭𝐬𝐀𝐩𝐩 𝐂𝐡𝐚𝐧𝐧𝐞𝐥: 🌐 𝐓𝐞𝐥𝐞𝐠𝐫𝐚𝐦: 🌐 𝐈𝐧𝐬𝐭𝐚𝐠𝐫𝐚𝐦: Download the PDF used in this video here: #CMAInter #LeaseAccounting #AS19 #FinanceLease #CMAInterGroup1 #FinancialAccounting #CMAIntermediate #OneShotRevision #CMAInterPaper6 #ICMAI