An Auto Finance Company (AFC) is doing business for last 20 years and offers various financial products including finance lease, hire purchase and operating lease. AFC takes postdated cheques from customers in advance and deposits with banks on due dates. AFC enters the realization date of all cheques in system on daily basis. Average numbers … Continue reading “postdated cheques from customers in advance | My Assignment Tutor”
An Auto Finance Company (AFC) is doing business for last 20 years and offers various financial products including finance lease, hire purchase and operating lease. AFC takes postdated cheques from customers in advance and deposits with banks on due dates. AFC enters the realization date of all cheques in system on daily basis. Average numbers of daily deposited cheques are 700. Around 10% of deposited cheques gets returned unpaid. The unpaid cheques are deposited next day into bank. The AFC cannot switch to Direct Debit because of certain reasons The AFC is following IFRS for accounting. The company follows the policy to round rental amount to zero decimal places. The rentals are amortized using annuity method. The company books income on monthly basis. The AFC has extended a lease facility to a Ltd. company, the extracts of which are as under: Difficulty Level 1: Asset cost = 100,000Contract terms = 48 monthsAnnual interest rate = 12%Re-payment frequency = Quarterly in AdvanceRV = 10,000 and receivable at the end of contractDown payment = 8,000Security deposit = 50,000Other direct cost associated with the contract payable at beginning of the contract to third party (this amount is not receivable from customer) = 500Other direct income associated with the contract and receivable from customer at beginning of the contract = 300Start day of the contract = 15th February 2018Asset useful life = 60 monthsRental numbers 10th and 11th are Zero and rental numbers 5 & 6 are 5,200 eachAll remaining rentals must be of uniform amount and use of XLS Goal Seek is prohibited for rental calculation Difficulty Level 2: Asset cost = 100,000Contract terms = 48 monthsAnnual interest rate = 12% for first 24 months (i.e. for rental numbers 1 to 8)Annual interest rate = 15% for next 24 months (i.e. for rental numbers 9 to 16)Re-payment frequency = Quarterly in ArrearRV = 10,000 and receivable at the end of contractDown payment = 8,000Security deposit = 50,000Other direct cost associated with the contract payable at beginning of the contract to third party (this amount is not receivable from customer) = 500Other direct income associated with the contract and receivable from customer at beginning of the contract = 300Start day of the contract = 15th February 2018Asset useful life = 60 monthsFix amount of rental number 8 and 9 are 8,000 eachAll remaining rentals must be of uniform amount and use of XLS Goal Seek is prohibited for rental calculation Difficulty Level 3: Asset cost = 100,000Contract terms = 48 monthsAnnual interest rate9% (for installments 1 to 6)8.5% (for installments 7 to 16)Re-payment frequency = Quarterly in AdvanceRV = 10,000 and receivable at the end of contractDown payment = 8,000Security deposit = 50,000Other direct cost associated with the contract payable at beginning of the contract to third party (this amount is not receivable from customer) = 500Other direct income associated with the contract and receivable from customer at beginning of the contract = 300Start day of the contract = 15th February 2018Asset useful life = 60 monthsRental numbers 9~10 and 13~16 should be double in amount as compared to rental numbers 1 to 8 with the exception of rental number 11 & 12 which are of fix amount i.e. 5,500 each (e.g. if rental numbers 1 to 8 are 5,000 each then rental numbers 9, 10, 13, 14, 15 & 16 should be 10,000 each)Use of XLS Goal Seek is prohibited for rental calculation Please select one of the numeric scenario, as mentioned above, and then proceed. The selection of difficulty level will reflect your grip on the subject. There would be cross questioning during the assignment presentation so please be prepare for it You are required to: Determine the lease type according to IFRS definitions for both lessee and lessor. Please mention all criteria of IFRS and identify that which one is met and which one is notCalculate periodic lease rentalsBased on point 2 above, prepare amortization schedules for AFCCalculate the AFC’s achieved rate of returnPrepare all accounting entries for AFC starting from contract signing till restructuring. Accounting entry must be with reference to a dateThe AFC customer has defaulted after paying 2nd rental and now 5th rental is due. Customer has requested and AFC agreed to restructure the lease facility by increasing interest rate 1 % p.a. and recovering the interest overdue and penalty amount upfront. The company charges 20% p.a. penalty for overdue on actual days basis. Please workout the restructured rental amount, New Amortization schedule and the accounting treatment at restructuring this contract. Please keep the Zero rental or fix amount rental same as mentioned in the original scenario Also please answer the following questions: Define what is business process re-engineering. Explain a business case where you re-engineered a business function (maximum one slide)Would you like to re-engineer any of the AFC process based on available information? (maximum one slide)Briefly explain the difference between business requirements, functional requirements and nonfunctional requirements? (maximum one slide)What is the role of business analyst in the development of software application as compared to business analysis of a company for risk management? (maximum 2 slides)Briefly explain the different stages of SDLC (Software development life cycle). (maximum one slide)What are Agile and Waterfall methodologies and how are they different? (maximum one slide)Briefly explain that what techniques should be used to perform IT business analysis activities (maximum one slide) You are free to: Take assumptions and approach this assignment accordingly.Seek advice from othersConsult any books and websites
