We explain in a practical way how to account for a lease.
Learn about the advantages of financial leasing for your company.
Under a leasing contract,
cuba email list one of the parties, which is usually a financial institution, delivers a productive asset to the other for its use or enjoyment . In exchange, it receives the payment of a periodic fee over an agreed period. This fee is made up of a part to recover the cost of the asset and another part related to the financial burden. VAT must be added to the sum of both amounts.
All the fees payable in the leasing contract will be detailed in the contract. An annex with the amortization table of the financial leasing contract must be included , which will include the following fields:
Installment No .: Each of the installments into which the contract is divided will be assigned a number.
Cost recovery: includes the proportional part of the cost recovery of the asset.
Financial charge : includes interest for financing the asset.
Net share : is the sum of the recovery of the cost of the asset and the financial burden of the share.
VAT / IGIC : its taxable base is the net amount.
Gross fee : is the amount payable, being the sum of the net fee and VAT.
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How is a lease accounted for?
To record your payments, the receipt issued by the bank will be used as documentary support. This will be like an invoice and must include the corresponding invoice number.
The amortization table will be necessary to determine the short-term and long-term portion of the lease each year, during the duration of the contract. It is necessary to take into account whether it is at a variable interest rate. When changes in the interest rate occur, a new table with the recalculated installments will be necessary in order to make the accounting entries .
As specified in the General Accounting Plan , the lessee or company that signs the leasing contract will record the assets according to their nature. Fixed assets used under this modality will be recorded in the fixed asset accounts at the time of signing the contract, recording as a counterpart a financial liability for the same amount. The short-term and long-term parts will be separated.
The financial burden borne by the interest will be distributed over the term of the lease. It will be charged to the profit and loss account for the year in which it accrues.
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