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Advanced Financial Accounting - Doc

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Added on  2020-03-16

Advanced Financial Accounting - Doc

   Added on 2020-03-16

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Running head: ADVANCED FINANCIAL ACCOUNTINGAdvanced Financial AccountingName of the StudentName of the UniversityAuthor note
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1ADVANCED FINANCIAL ACCOUNTINGTable of ContentsAnswer a..........................................................................................................................................2Benefits of sale and leaseback.....................................................................................................2Answer b..........................................................................................................................................2Type of leasing............................................................................................................................2Answer c..........................................................................................................................................3Accounting profit or loss.............................................................................................................3Answer d..........................................................................................................................................4Changing in the way of accounting for building depreciation....................................................4Reference.........................................................................................................................................5
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2ADVANCED FINANCIAL ACCOUNTINGAnswer aBenefits of sale and leaseback In accounting, ‘sales and leaseback’ is considered as a quick way to build up funds. Inthis process, financial entity continues with is ownership right even after selling out of theproperty by immediate leaseback (Longinidis and Georgiadis 2014). Four primary benefits thatcould be identified from Lion Nathan case study are- attainment of capital at a lower borrowingrate, no recorded agreement in financial balance, maintenance of asset controlling and receivingbenefit of taxation from leasing expenditure. When Lion Nathan sorts to adapt Sales and Leaseback procedure then the concernedcorporation will be able to retain its control over pubs. The operating activities of the pub remainunaffected with this kind of trading. No matter whether the ownership retain in the form oforiginal owner or as a lessee, it enhances the bargaining power. In times of financial leasing,payment of interest and depreciation of fixed capital are considered as operational expenses andhence, this tends to increase tax protection and generate a higher net profit. Similarly, payment oflease in the process of operating lease is also viewed as a part of financial expense (Ashiya2015). The prior knowledge base of the property helps the owners of Lion Nathan to have anadditional edge of benefit while negotiating on lease payment. There is no long-term liability ofthe company as reflected from solvency performance.
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