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HMRC internal manual

Business Leasing Manual

From
HM Revenue & Customs
Updated
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Lease accounting: finance lease accounting: finance lessees: example 1: the accounting entries

The allocation of the rentals at BLM15520 can then be translated into accounts format:

Balance Sheet At start (£) Year 1 (£) Year 2 (£)
       
Assets      
Leased Asset 50,000 50,000 50,000
Depreciation   2,500 5,000
    47,500 45,000
Liabilities*      
Lease creditor   50,000 41,600
Repayment   8,400 9,200
Net   41,600 32,400
Profit and Loss A/c      
Depreciation   2,500 2,500
Finance Charge   4,000 3,200