Advanced Accounting: Lion Nathan Pubs Sale, Depreciation and Lease

This report analyzes the accounting practices of Lion Nathan, focusing on the sale of pubs, depreciation of buildings, and the implications of leasing contracts. It explores the financial impact of selling pubs, considering the potential for net profit and the strategic importance of such decisions for business growth. The report also examines the accounting treatment of depreciation, highlighting how it can be used to reduce tax liabilities. It provides a detailed analysis of the financial statements, particularly the profit and loss statement, to demonstrate the impact of these accounting treatments. The study uses references to books and journals to support the analysis and conclusions. The report concludes by emphasizing the need for a sound accounting system to accurately reflect the impact of sales and leasing activities on a company's financial performance.

Advanced Accounting
Issues

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
a) Treatment of Lion Nathan account for profit and loss on the sale of pubs........................1
b) Accounts for depreciation of the buildings........................................................................1
CONCLUSION................................................................................................................................1
REFERENCES................................................................................................................................2

INTRODUCTION
Advance accounting treatment of Mr. lion Nathan are mentioned under this project
assignment.
a) Treatment of Lion Nathan account for profit and loss on the sale of pubs
According to the mentioned case, Lion Nathan has put the business operations of his pub
into review from which he has found that 65$ million were invested into hotel assets in order to
increase the share market of Victorian bear market (Hoyle, Schaefer and Doupnik, 2015). If
value of pubs is undervalued after review then the outcomes from selling pubs are considered as
net profit for Lion Nathan. It also looks that if business of pubs are below to BEP level then the
best option is to sale so as to make proper growth of other units.
b) Accounts for depreciation of the buildings
As per this scenario, the sale of pubs will make Lion to loss of its ownership but, he still
be able to get sufficient amount as net profit. The leasing contract can make Lion to get profit
with fixed ratio in which the agreement is made (Kaplan, 2011). This would be considered as
finance lease where there is a choice of sale and leasing option. The owner of pubs can reduce
their tax by depreciating the amount of assets over a particular period of time. It is mainly
dependent upon period of lease time. If it is estimated for more than 50 years then depreciation
of 2% per annum is charged.
CONCLUSION
From the above two questions, it has been concluded that lion Nathan needs to use proper
accounting system to identify his overall sales and leasing impact.
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REFERENCES
Books and Journals
Hoyle, J. B., Schaefer, T. and Doupnik, T., 2015. Advanced accounting. McGraw Hill.
Kaplan, R.S., 2011. Accounting scholarship that advances professional knowledge and practice.
The Accounting Review. 86(2). pp.367-383.
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