9. Books of Lessor -Financial Lease
Following Entries are Journalized :
i) Lease Receivable a/c Dr
To Asset a/c
To Sale a/c
( Being asset transferred on Financial Lease )
Amount will be calculated as Follows :
Net Investment =
PV of Agreed Lease Rentals
+
PV GRV Lessor
+
PV of UGRV
+
Net Investment
(NI )
= PV of Gross investment
Gross Investment (GI )
= MLP Lessor
+
UGRV
MLP Lessor :
Agreed Lease Rentals
Add: Guaranteed Residual value by lessee or on his behalf
GRV Lessor : Whichever is Higher :
Guaranteed by Lessee OR
On his Behalf
OR
By 3rd Party which is financially capable.
UGRV = Residual Value
UEFI
- GRV Lessor
= Gross Investment - Net Investment
UEFI = Unearned Finance Income
GRV = Guaranteed Residual Value
UGRV = Unguaranteed Residual Value
------------------*********
ii) Expences on Lease :
Expences a/c Dr
To Bank a/c
( Being Expence Incurred) ( Written in P&L a/c)
iii) Depretiation will not be claimed in accounts by lessor.
iv)
Bank a/c Dr
To Lease Rental a/c
( Being amount received)
v)
Lease Rentals a/c Dr
To Lease Receivable
( Being amount Adjusted)
vi)
Lease Receivable a/c Dr
To Finance Income
( Being Income recorded)
Note :
•
Lease Receivable will always be shown as Net Investment in each
Year.
•
For this purpose revised & New GRV will be considered.
•
Finance Income will be computed as Follows :
Lease Receivable : Closing Balance (Dr Bal)
Add: Available Balance in Ledger
Finance Income
------------******
vii) Lease Rentals a/c Dr
To Lease Receivable
( Being amount adjusted)
Note:
• Under tax law Depreciation is allowed as expense to
lessor and lease rentals are considered as income.
• Hence there can be DTA/ DTL in case of lessor also.
10. Disclosure Requirements
i)
Statement of lease Rentals : (Exemption)
Period
Amount
Present Value
0 – 12 Month
-----------------12 – 60 Month
-----------------60 & Beyond
-----------------********
********
ii) Disclose : UEFI = Unearned Finance Income
UGRV = Unguaranteed Residual Value
Provision for Uncollectable Rents
iii) Genenral Description of Leasing Policies.