Finance and Accounting: Leases

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manz786
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a) Describe the different accounting treatments between operating lease and finance lease in the lessee's accounts.

Any help would be much appreciated. Thanks
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Enoxial
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#2
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(Original post by manz786)
a) Describe the different accounting treatments between operating lease and finance lease in the lessee's accounts.

Any help would be much appreciated. Thanks

Operating Lease:
In this the lessee(to whom the asset is leased) should treat this as Renting the Asset.


Finance Lease:
This is a much different type of lease, in this you have to set up a FLO(Finance Lease Obligation) account, depreciate the asset and also account for MLP(Minimum Lease Payements).

Under the Exposure Draft for IAS 17, The Op. Lease is expected to be removed.
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manz786
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Thanks for the info
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avrilcory
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#4
Report 8 years ago
#4
If you want to know about the finance lease. It is one where the risks and rewards of the owner of leased or transferred to lessee but not the actual ownership, that risk determined in this case of finance lease we can say that national ownership is passed to the lessee and one on which accounting standards give guidance to you.


Thanking You
Reeleezee
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