Financial Accounting

16 CHAPTER

Accounting for Hire Purchase

MEANING OF HIRE PURCHASE AGREEMENT

Hire Purchase agreement means an agreement under which goods are let on hire and under which the hirer has an option to purchase them in accordance with the terms of the agreement and includes the agreement under which:

1. Possession of goods is delivered by the owner thereof to a person on condition that such person pays the agreed amount, in periodical instalments;
2. The property in the goods (i.e., ownership of goods) is to pass to such a person on the payment of the last instalment; and
3. Such a person has a right to terminate the agreement at any time before the property so passes.

CONTENTS OF HIRE PURCHASE AGREEMENT

According to Section 4 of the Hire Purchase Act 1972, ...