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In AS19 definition of financial lease what is the meaning of - 1. major part of economic life 2. MLP amounts to substantially FV of leased asset what can be considered as the exact % or amounts considered substantial or major
Answers (3)
(1) Economic life refers to the length of time an asset is expected to be useful to the owner. It is also called useful life or depreciable life. ... An asset could still be functioning as it is supposed to, but not considered economically useful. - the lessee acquires the economic benefits of the use of the leased asset for the major part of its economic life in return for entering into an obligation to pay for that right an amount approximating to the fair value of the asset and the related finance charge (2) In this context, â??substantiallyâ?? means 90% or more of the fair value of the underlying asset.