LEASING ACCOUNTING ACCORDING TO INTERNATIONAL REGULATIONS

Sxomple 6:

S.A. Bravo owns a car leasing business. On 01.01.202N it concluded a leasing contract with the lessor under the following conditions:

Fair value of the car on 01.01.202N – 88 650 MDL

Duration of the leasing contract – 01.01.202N – 31.12.202N+3 DFU – 5 years Amortization method – linear Interest – 5%

Expenses related to the transfer of the leased asset – 5 000 MDL Leasing payments paid at the end of each year – 25 000 MDL / year Redemption option – possible on 31.12.202N+3 at the value of MDL 10,000 Early termination – not possible

Determine: What will be the accounting formulas reflected by the lessor at the end of 202N+1

Note: PV, K4 = 2,775091

31.12.202N+1:

• Settlement of the book value to current expenses (depreciation) 18 730 MDL = (88 650 + 5 000)/5 Years

Dt Cost of Sale

Ct Anticipated expenses (value correction)

• Calculation of leasing interest 25 000 MDL

Dt Leasing claims

Ct Sales revenue