AN ASSESSMENT OF ACCOUNTING SYSTEM IN THE LEASING INDUSTRY, (A CASE STUDY OF JOHN HOLT PLC LAGOS)

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TABLE OF CONTENTS

TITLE PAGE

CERTIFIED MAIL

DEDICATION

ACKNOWLEDGEMENT

CHAPTER ONE

1.1 BACKGROUND OF THE STUDY

1.2 STATEMENT OF THE PROBLEM

1.3 RESEARCH QUESTION

1.4 SIGNIFICANCE OF THE STUDY

1.5 SCOPE OF THE STUDY

1.6 LIMITATIONS

1.7 RESEARCH QUESTIONS

1.8 PLAN OF THE STUDY

1.9 DEFINITION OF TERMS

CHAPTER TWO

LITERATURE REVIEW

2.0     INTRODUCTION

2.1     THE MEANING OF LEASING AND LEASING BUSINESS

2.2     PREPARATION OF FINAL ACCOUNT BY THE LESSOR

2.3.1   THE OPERATING METHOD OF ACCOUNTING IN THE BOOKS OF THE LESSEE

2.3.2. LESSOR’S   BOOKS

2.3.3 THE FINANCE METHOD OF ACCOUNTING IN THE LESSEE’S BOOK.

2.4 LEASE BUSINESS

2.5  GENESIS OF LEASING

2.5.1 DEVELOPMENT IN THE UNITED KINGDOM

2.52 LEASING IN THE TWENTIETH CENTURY

2.6 EVALUATION AND INCOME RECOGNITION

2.7     PROJECT APPRAISAL CONCEPT

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 HISTORICAL BACKGROUND OF JOHN HOLTS

3.2 POPULATION 3.3 SAMPLE AND SAMPLING TECHNIQUES  

3.4 METHOD OF DATA COLLECTION

3.5 METHOD OF DATA ANALYSIS               

CHAPTER FOUR

DATA ANALYSIS AND PRESENTATION OF FINDINGS

4.0 PREAMBLE.

4.1 ANALYSIS OF RESEARCH QUESTIONNAIRE        

4.2 AGE 

4.3 OTHER FINDINGS

4.4 RESEARCH FINDINGS AND TESTING OF HYPOTHESIS  

4.5 TESTING OF HYPOTHESIS           

CHAPTER FIVE

5.1 SUMMARY.

5.2 CONCLUSION             

5.2 RECOMMENDATIONS

BIBLIOGRAPHY

CHAPTER ONE

1.1 BACKGROUND OF THE STUDY 

      Leasing is an alternative source of finance in Nigeria, the importance of leasing in capital investment in the world over cannot be over emphasized, but is yet to take a firm root in Nigeria, this is because, this is because the syndrome of owning everything is still in vogue in the country, the credit evasive is still very high in Nigeria, this singular reason account t for the low patronage of leasing as an alternative source of finance in the country, leasing has many definitions, but the legal definition as  given by the statement of accountancy no ii. Says “leasing is a contractual agreement between owner (lessor) and another party the (lessee)” which conveys to the lessor, the right to use the leased asset for a consideration, usually a periodic charge called rentals.     

      As it can be seen from the above, the concept of leasing envisaged  the separation of ownership from the economic use of an asset , this is a fundamental characteristics of leasing, all other features flows from the basic level, this form of credit level   is  totally different from other forms of finance because it only involve an exchange of asset for a periodic rental, since this form of credit is evolving, there is the need therefore for a standard evaluation and accounting system on the subject, this appreciation of leasing came to limelight in  Nigeria in the early 80s, this was made possible because of the austerity measure introduced by the democratic administration of Sheu Shagari and  the subsequent introduction of structural adjustment (SAP) in  Nigeria being a Mono-cultured economy that depended wholly on crude oil for her revenue  and the continuous fall of crude oil price in the international market, because  of this, it then became imperative for business to source their capital investment and needs elsewhere.

      The uncertainty which paraded the economy made it difficult for financial institutions to go into medium and long term credit financing. Hence, the appreciation of leasing by both lessor and the lessee, there are however   two main categories of leasing:

  1. Operating leasing:- this is where the lessor while giving the lessees the use of basic properties retains practically all the risk, obligations and reward of ownership.
  2. Finance capital lease: – this is where the lessor transfers the risk of ownership and reward to the lessee who is obligated to pay such cost as insurance maintenance, and similar charges on the property.

FEATURES OF FINANCE LEASE (SASII)

  1. The lease is not concealable.
  2. The lessee assumes most of the risk and reward of ownership.
  3. The lease term covers substantially (80% or more) of the useful life of the asset.
  4. The lessee is responsible for repairs, maintenance and insurance of the assets.
  5. The lessor has the right of repossession when certain speculated contract conditions are breached.    

1.2 STATEMENT OF THE PROBLEM

      As it can be seen from the background of the study Hence, on accounting for lease, there are numerous problems of which some  are:

  1. Cost of capital :- the cost of capital is difficult to determine because it depend on the capital structure of the lessor, if the cost of capital is high, then the rental may be prohibitive and vice – versa.
  2. Taxation: – the position of the lesser   will impact significantly on the rental and the frequent charge may be an advantage to the lesser.
  3. Accounting treatment: – at times, the lease are not treated according to the classification i.e. operating lease being treated as a financial lease.
AN ASSESSMENT OF ACCOUNTING SYSTEM IN THE LEASING INDUSTRY, (A CASE STUDY OF JOHN HOLT PLC LAGOS)