Accounting treatment of financial leases, how to do accounting treatment of financial leases

The financial lease method means that the lessee enters into a supply contract with a third party (supplier) at the request of the lessee (user), according to which the lessor pays to purchase the equipment selected by the lessee from the supplier. At the same time, the lessor enters into a lease contract with the lessee to lease the equipment to the lessee and collects a certain amount of rent from the lessee. The accounting treatment of financial leasing of fixed assets is as follows:

1. On the lease commencement date, the accounting entries are as follows:

Debit: Long-term receivables, Debit: Unsecured Residual Value, Credit:

Financial Lease Assets, Credit: Bank Deposits (Initial Direct Expenses), Credit: Non-Operating Income (the difference between the fair value of the financial lease asset and the book value; Conversely, debits""Non-operating expenses""Credit:

Unrealized financing gains [(Minimum Lease Receipts + Unsecured Residual Value) - (Present Value of Minimum Lease Receipts + Present Value of Unsecured Residual Value)].

2. The accounting entries of the unrealized financing income are as follows:

Borrow: Unrealized financing income, Credit: Lease income.

3. Upon receipt of rent, the accounting entries are as follows:

Borrow: bank deposits, credit: long-term receivables.

1. Accounting treatment of financial lease by the lessee.

1. Accounting treatment on the lease commencement date.

At the lease commencement date, the lessee should normally record the lesser of the fair value of the leased asset and the present value of the minimum lease payment as the leased asset and the minimum lease payment as the long-term payable at the lease commencement date, and record the difference between the two as an unrecognized financing charge. However, if the financial lease asset does not account for a large proportion of the total assets of the enterprise, the lessee may record the leased assets and long-term payables at the minimum lease payment date on the lease commencement date. In this case, the "small proportion" usually means that the total amount of fixed assets under financial lease is less than 30% (including 30%) of the total assets of the lessee.

In this case, the lessee has the option to determine the financial leased assets and long-term payables, i.e., the lower of the minimum lease payment or the present value of the original carrying amount of the leased asset and the present value of the minimum lease payment. In this case, the "original book value of the leased asset" refers to the book value of the leased asset as reflected in the lessor's account on the lease commencement date.

If the lessee knows the interest rate embedded in the lease when calculating the present value of the minimum lease payment, it shall use the lessor's embedded interest rate as the discount rate; Otherwise, the interest rate specified in the lease contract shall be used as the discount rate. If neither the interest rate embedded in the lease nor the interest rate specified in the lease contract is available from the lessor, the bank loan interest rate for the same period shall be used as the discount rate. The interest rate embedded in the lease refers to the discount rate at which the sum of the present value of the minimum lease payment and the present value of the unsecured residual value is equal to the original book value of the asset on the lease commencement date.