This can be done very carefully , according to the art of accounting first , the balance of liabilities from finance leases ( This obviously requires discounting of lease! ) , The initial value , cumulative amortization recognized in the opening balance sheet of the previous year ( 31 December 2012 ) . Then, we calculate what was the value of depreciation for the previous year , the amount of interest included in lease installments, and to withdraw the amount of the installment lease that was originally in the costs in 2012. Then we go ahead and do the same thing for the current year and at its end . We perform a large number of relevant postings and theoretically it will result in the financial statements at 31 December 2013, which is impacted by the lease obligations , net value of fixed assets , interest expense , depreciation costs and the result from previous years. This is a very large nutshell, because the farther the subject , the more work and questions.

And what about when we have such lease agreements dozen? There is a way to cut corners ! Maybe not so accurate, but sometimes it is not worth spending two weeks on the transformation of the lease, if it can be done in one day or less.

The case can be simplified. Just calculate the discounted present value of the lease liability at 31 December 2013 , to determine the initial value of the leased asset, divide it by the useful life of the leased asset ( the shorter of the two - or lease agreement , or a normal period for such asset) to get an annual depreciation. The initial value diminish accordingly depreciation and amortization for the period from the beginning of the lease term to December 31, 2013 and in this way we obtain the net value of the asset. On the other side we have a lease obligation on December 31, 2013 . In the profit and loss we will have calculated amortization for the year, the amount of interest from the comparison of the lease payments discounted to their nominal value attributable to the year 2013; exclude the value of the lease payments that originally we have recorded in the cost of external services. The difference between debits and credits for those postings give us the amount to be recognized as a cumulative result from previous years, as a result of the restatement . Let's do it in excel sheet and attach it to the journal entry document.

How to restate comparative information?. Here 's all you have to book ! Just for lease liabilities at 31 December 2013 you need to add value assigned to capital installments in 2013, while the net value of fixed assets should be increased by depreciation for 2013 and now we have the opening balance of 2013 in the balance sheet. In the income statement for the year 2012 exclude , of course, lease payments , and include the annual depreciation and interest charges (from the comparison of the lease payments discounted to their nominal value attributable to the year 2012). Again, the difference between debetami rise and loans for those księgowaniach and taking into account the difference in the result of previous years , which we calculated by setting the year 2013, as above. This difference between debits and credits for those postings gives a result of previous years' as of 1 January 2012, as a result of the restatement (fortunately we do not have anything more to restate) . Let's do it in excel sheet and on its basis restate presentation of the relevant items of the balance sheet and income statement for 2012.

If the matter too simplified, please comment. Discussion is good?

More practical advice and a special calculator that helps in restatements of finance leases for accounting purposes can be found at these links:
1) free e-learning - finance lease
2) calculator to be used for restatement of leases in balance sheet - finance lease


S.Ekman ? General Manager
FY AUDIT/24iValue

Main page Other posts