BLM15615 - Lease accounting: finance lease accounting: finance lessees: example 2: allocating the interest element
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 finance charge is higher than Example 1 because the capital element remains outstanding longer and because the risk to the lessor is greater because the asset will be worth less than the capital outstanding throughout the life of the lease.