LEASING ACCOUNTING ACCORDING TO INTERNATIONAL REGULATIONS

Sxomple 3:

An entity enters into a leasing contract for a period of 7 years for the use of industrial equipment. Annual fixed rate: 100 000 lei. Marginal loan rate applied: 3%.

The table below represents the schedule received from the lessor, which is also a supporting document for the lessor, based on which the lessee will separate the right of use and the interest.

From the calculation below, it follows:

• The value of the right of use reflected in the lessee’s accounting: 623,028.30 lei (PV, K4=100,000 *6.230283);
• Annual depreciation determined on a straight-line basis: MDL 89,004.04 (RON 623,028.30 / 7 years);
• Total interest for the first year: 18,690.85 MDL.

Based on the above example, the principal reflection of the operations in the lessee’s accounting, according to the provisions of IFRS, is as follows:

Recognition of the leasing right in the accounting. This right can be recognized in the form of an intangible asset, in correspondence with the leasing debt, at the remaining value of the payments, updated according to the interest rate used: MDL 623 028.30.

Dt Right to use the asset under the leasing contrac

Ct Preliminary Lease Debt

• Reflection in the accounting of interest – financial expenses 18 690.85 MDL.

Dt Interest expenses

Ct Preliminary lease debt

Based on the above example, the principle reflection of the operations in the lessee’s accounting, according to the provisions of IFRS, is as follows:

• Receipt of the invoice and reduction of the preliminary leasing debt 100 000 MDL.

Dt Preliminary lease debt

Ct Lesing Debts

• Depreciation of the right of use 89 004,04 MDL

Dt Expenses/costs with depreciation of the right of use

Ct Depreciation of the right of use

Regarding the subsequent valuation, after the start date of the development, a lessee must value the asset related to the right of use applying the cost-based model.