Finance lease

A client has just acquired a new van on a finance lease, I have never had to account for a finance lease before and I am going round in circles trying to find information on the transactions that need to go in the accounts - any advice would be appreciated


  • davealucas
    davealucas MAAT Posts: 139 Dedicated contributor 🌟 🐵 🌟
    The van will need to be treated as a fixed asset and written down (depreciated) over the term of the lease at it's normal purchase value.

    Payments for the lease will need to be treated as a liability (almost like a loan) repayable over the term of the lease.

    The difference between the value of the van and the lease repayments will effectively be treated as interest payments through the revenue accounts.
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