LEASING ACCOUNTING ACCORDING TO INTERNATIONAL REGULATIONS

Sxomple 7:

On 01.01.202N, Interfobos SRL, lessee, concluded a lease contract for a production equipment for a period of 4 years.

The annual leasing payments amount to MDL 10,000 and are paid at the end of each year. The default rate of the contract is 4%. The direct initial costs of the leasing contract amount to MDL 1,000.

The contract is quietly extended only once under the same conditions, unless the lessee terminates the contract with 6 months’ notice. Interfobos SRL is very dependent on this machine and is very unlikely to resort to termination.

According to the company’s accounting principles, the machines are depreciated over 7 years.

• Calculate the value of the right to use the machine and the leasing debts: 68 327,45 = 1 000 + 10 000 *6,732745

(PV, K4 = 6,732745)

• Prepare accounting forms related to them

Dt Right to use the asset under the leasing contract 68 327,45 MDL

Ct Preliminary lease debt 67 327,45 MDL

Ct Current payables 1 000,00 MDL

• Calculate and reflect the amount of impairment of the right of use to be recorded for the financial year 202N

Depreciation of the right of use 68 327,45 / 7 Years = 9 761,06 MDL

Dt Expenses/costs with the amortization of the right of use

Ct Depreciation of the right of use