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HMRC internal manual

Business Leasing Manual

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HM Revenue & Customs
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Lease accounting: finance lease accounting: finance lessees: example 2: allocating the interest element

The lessee’s finance charges (the ‘interest element’) of the rentals are then allocated to the different periods of account using one of the prescribed methods, see BLM15040. In Example 1 the Rule of 78 was considered likely to be an acceptable method. This is less clear in Example 2, see BLM15620 onwards.