Finance Lease Query
KaelaH
Registered Posts: 131 Dedicated contributor 🦉
I am dealing with a client that has vehicles on Finance Lease
Am I correct in posting the following journals please?
On initial setup -
DR B/S Fixed Asset Vehicles (Cost of vehicle - or in this case total minimum rentals)
CR B/S Finance Lease Creditor
Monthly Payments -
DR B/S Finance Lease Creditor (Net Amount)
DR B/S VAT Input
CR B/S Bank
Year End -
DR P&L Depreciation ??
CR B/S Fixed Asset Vehicle Dep'n A/c
- Also, make adj to show creditors less than / greater than 1 year in accounts
Am I missing anything?
The only other query i have is whether this depreciation is treated like all other asset depreciation?
As its a Finance Lease I'm understanding that I cannot claim Capital Allowances on this, therefore I also understand that I can in fact claim all costs of hire against Company Profits (providing it is over the life of the vehicle and not necessarily the term of the lease, unless they are the same). Therefore I am just wanting to check the correct treatment.
This was always so much easier when you just claimed monthly rental without Capitalising the asset!!! Am suitably confused
Am I correct in posting the following journals please?
On initial setup -
DR B/S Fixed Asset Vehicles (Cost of vehicle - or in this case total minimum rentals)
CR B/S Finance Lease Creditor
Monthly Payments -
DR B/S Finance Lease Creditor (Net Amount)
DR B/S VAT Input
CR B/S Bank
Year End -
DR P&L Depreciation ??
CR B/S Fixed Asset Vehicle Dep'n A/c
- Also, make adj to show creditors less than / greater than 1 year in accounts
Am I missing anything?
The only other query i have is whether this depreciation is treated like all other asset depreciation?
As its a Finance Lease I'm understanding that I cannot claim Capital Allowances on this, therefore I also understand that I can in fact claim all costs of hire against Company Profits (providing it is over the life of the vehicle and not necessarily the term of the lease, unless they are the same). Therefore I am just wanting to check the correct treatment.
This was always so much easier when you just claimed monthly rental without Capitalising the asset!!! Am suitably confused
0
Comments
-
Hi
Have a look at http://www2.accaglobal.com/archive/2888864/30941 it's a little dated but still gives the general process to follow.
Neil0
