Question

Is it true that for an asset to be recognised by a reporting entity it needs to be owned? Give an example to support your answer.

Answer 1

For an asset to be recognised by reporting entiry, it need not to be owned.

The ownership of asset is not compulsory to recognise a asset.

Hence, the given statement is false.

Example -1 :-

In hire purchase contracts, the hire purchaser does not get the ownership till the payment of last installment. But after the payment of 1st instalment, the hire purchaser will recognise the asset in the books of accounts of hire purchaser.

Example -2 :-

In finance lease agreements, ownership of the property is transferred to the lesse at the end of lease term. But the lessee will recognise the property in the books of accounts of lessee.

These are all the information and examples required to solve the above given question.

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I hope, all the above mentioned information and examples are useful and helpful to you.

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