LEASING ACCOUNTING ACCORDING TO INTERNATIONAL REGULATIONS

Sxomple 4:

An entity concludes a 3-year leasing contract for the use of a car, starting with 01.01.202N (with the possibility of terminating the leasing contract before the expiry date). Annual fixed rate: 15 000 MDL. Marginal loan rate applied: 6%.

The entity has the right to purchase the car at the end of the leasing contract for 80,000 MDL. The expected fair value at the end of the lease agreement is MDL 130,000. DFU = 5 years, calculation of depreciation according to the linear method. From the calculation below, it follows:

• The value of the right of use reflected in the lessee’s accounting: 107 265 MDL (PV, K4 = 15 000 * 2.673 + FV, K3 = 80 000 * 0.839602);
• Annual depreciation determined on a straight-line basis: MDL 107,265 / 5 years = MDL 21,453;

Based on the above example, the principled reflection of the operations in the lessee’s accounting, according to the provisions of IFRS, on 01.01.202N:

• Recognition in the accounting of the leasing right, updated according to the interest rate used: 107 265 MDL.

Dt Right to use the asset under the leasing contract

Ct Preliminary Lease Debt and 31.12.202N+2:

• Reflection in the accounting of the interest – financial expenses 5 377 MDL.

Dt Interest expenses

Ct Preliminary Lease Debt

• Receipt of the invoice and reduction of the preliminary leasing debt 15 000

Dt Preliminary lease debt

Ct Debts concerning lesing

• Depreciation of the right of use 21 453 MDL

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

Ct Depreciation of the right of use

• Restoration of the non-depreciated right of use in the composition of fixed assets 42 906 MDL

Dt Fixed assets

Ct Right to use the asset under the leasing contract

• Payment of the leasing debt95 000 MDL (80 000 + 15 000) or 107 265 + 17 735 (Interest) – 30 000 (2 rate)

Dt  Preliminary lease debt

Ct  Cash