In the Books of Hirer

The cash purchase price of the asset is capitalized and the capital of the hire purchase installment, that is, the cash purchase price less down payment, if any, recorded as a liability. Depreciation is based on the cash purchase price of the asset infinity with the policy regarding similar owned assets. The total charge for credit matured  charge at the inception of the hire purchase transaction deal is allocated over the hire using one of the several alternative methods, namely, effective rate of interest method, sum of years digits method and the straight line method.

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