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Hire purchase. A hire purchase (HP), [1] also known as an installment plan, is an arrangement whereby a customer agrees to a contract to acquire an asset by paying an initial installment (e.g., 40% of the total) and repaying the balance of the price of the asset plus interest over a period of time.
A bargain purchase option is given to the lessee. This is an option that allows the lessee, upon termination of the lease, to purchase the leased asset at a price significantly lower than the expected fair market value of the asset. The life of the lease is equal to or greater than 75% of the economic life of the asset.
A suspense account is an account in the general ledger in which amounts are temporarily recorded. A suspense account is used when the proper account cannot be determined at the time the transaction is recorded. When the proper account is determined, the amount will be moved from the suspense account to the proper account.
The formula for EMI (in arrears) is: [2] = (+) or, equivalently, = (+) (+) Where: P is the principal amount borrowed, A is the periodic amortization payment, r is the annual interest rate divided by 100 (annual interest rate also divided by 12 in case of monthly installments), and n is the total number of payments (for a 30-year loan with monthly payments n = 30 × 12 = 360).
Your bank will calculate your monthly payments based on the loan amount, interest rate and repayment term. Bank Fees. Banks can charge various fees for services, account maintenance and late payments.
The installment sales method, is used to recognize revenue after the sale has occurred and when sales are stipulated under very extended cash collection terms. [3] In general, when the risk of not being able to collect is reasonably high and when there is no reasonable basis for estimating the proportion of installment accounts, revenue recognition is deferred, and the installment sales method ...
With a simple interest loan, the amount you pay in interest with each payment remains the same for the loan’s lifetime. How to calculate the total interest charges will differ between the two ...
Unlike a traditional hire purchase, where the customer repays the total debt in equal monthly instalments over the term of the agreement, a PCP is structured so that the customer pays a lower monthly amount over the contract period (usually somewhere between 24 and 48 months), leaving a final balloon payment to be made at the end of the ...