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    JRIS11's Avatar
    JRIS11 Posts: 3, Reputation: 1
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    #1

    Dec 17, 2013, 01:45 AM
    Answers to Accounting Questions
    Under Hire Purchase financing terms, does this means I have to recognize the item as Fixed Asset? There is no Downpayment and Security Deposit required.

    Thanks and regards
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
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    #2

    Dec 17, 2013, 06:18 AM
    Under Hire Purchase financing terms, does this means I have to recognize the item as Fixed Asset? There is no Down payment and Security Deposit required.

    CORRECT: Under HP system, like finance lease, you acquire an asset the title of which will be passed on to you on payment of all installments.

    The HP contract may stipulate no down payment or security. If you have not paid any amount
    it is okay.
    JRIS11's Avatar
    JRIS11 Posts: 3, Reputation: 1
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    #3

    Dec 17, 2013, 08:08 PM
    When will I recognize as Fixed Asset in the books - HP finance terms start or after payment of all the installments?
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
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    #4

    Dec 18, 2013, 01:25 AM
    The date on which the asset is received. The HP contract entitles the entity to the possession of the asset for its use.
    JRIS11's Avatar
    JRIS11 Posts: 3, Reputation: 1
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    #5

    Dec 18, 2013, 02:11 AM
    Noted. Thanks rehmanvohra. Much appreciated.
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    rehmanvohra Posts: 739, Reputation: 27
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    #6

    Dec 18, 2013, 05:26 AM
    I am glad was to be of help. Please do not hesitate to contact me in case you need me.
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