BLM15525 - Lease accounting: finance lease accounting: finance lessees: example 1: the accounting entries
This manual is being updated to reflect FRS 102 (2024 amendments). For guidance on the tax treatment of accounts prepared under IFRS 16 or the revised FRS 102, please refer to pages within the BLM50000 chapter.
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 |
| Balance | 50,000 | 47,500 | 45,000 |
| Liabilities | |||
| Lease Creditor | - | 50,000 | 41,414 |
| Repayment | - | 8,586 | 9,241 |
| Net | - | 41,414 | 32,173 |
| Profit and Loss Account | |||
| Depreciation | - | 2,500 | 2,500 |
| Finance Charge | - | 3,814 | 3,159 |