A finance lease is where a loaned asset is (in most cases) pimped to one party for the useful lifetime of it.
In the accounts of business, it is recorded much the same as a hire-purcase agreement. It is reocrded in the balance sheet (as at <date>) as the cost of the fixed asset (excluding interest) less the provision for dep'n. It is also recorded in the trading profit and loss account (for year ended <date>) as interest due for the year and the dep'n.
The balance sheet also record finance leasing as a liability for future payments (excluding intrest), see accruals, shared betwixt current liabilities and long-term liabilities.
In the accounts of business, it is recorded much the same as a hire-purcase agreement. It is reocrded in the balance sheet (as at <date>) as the cost of the fixed asset (excluding interest) less the provision for dep'n. It is also recorded in the trading profit and loss account (for year ended <date>) as interest due for the year and the dep'n.
The balance sheet also record finance leasing as a liability for future payments (excluding intrest), see accruals, shared betwixt current liabilities and long-term liabilities.
We have secured a finance lease.
by Kung-Fu Jesus April 30, 2004