BLM15550 - Lease accounting: finance lease accounting: finance lessees: example 1: lease terminated early - reconciliation of lessee's cash outlay
On the basis of the information at BLM15540 and BLM15545
the total cash outlaid by the lessee can be reconciled with the charges made to its profit and loss account over the period of the lease until it is terminated to the to profit and loss account, as follows:
| Cash position | £ |
|---|---|
| Rentals paid for primary period: 4 x £12,400 = | 49,600 |
| Rebate received | (29,100) |
| Net outlay | 20,500 |
| Charge to Profit and Loss Account | |
| Depreciation: 4 x £2,500 = | 10,000 |
| Finance charges | 11,122 |
| plus extra on disposal | 478 |
| Profit on sale | (1,100) |
| Net charge | 20,500 |