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Accounting for Finance Leases

  • The module is useful when:
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You want to correctly classify a lease contract (finance lease versus operating lease)

You do not know how to discount leasing instalments and how to calculate the current present value of leasing liabilities

You want to calculate the internal rate of return (IRR) for a leasing contract
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Service description24iValue imitates the process of thinking and the actions a conventional expert implements to enter the finance lease agreements in the books.The system will guide you step by step through the process of analysis and calculations, so that even if you know little about this rather difficult subject you can easily determine whether an arrangement is an operating lease or an finance one, and can calculate the initial value of the leased asset or determine the present value of lease liabilities for any balance sheet date.

Our system also allows you to make calculations for leases denominated in foreign currencies and to calculate interest rates appropriate to discount the lease payments (e.g. Internal Rate of Return - IRR).

Using 24iValue you minimise the risk of error in book recognition of financial leasing. The embedded help and clarification as well as the clear method to calculate the amounts related to financial leasing will help you save much time doing the task.

This module is indispensable when you do not know how to discount the lease payments and determine the present value of lease obligations.

This easy-to-use finance lease calculator will guide you through all the necessary calculations, including calculation of the internal rate of return (IRR) needed to discount the lease payments.

Do you know that ... ?

Leasing contracts continue to be major accounting problem. Due to the time required to perform the task, we often skip analysis of leasing contracts and we treat the contracts in accordance with the form and not the content.

Financial leasing is a method to finance purchases of fixed assets. Essentially, it is not much different from having the purchase of the fixed asset financed with a loan.

Recognition of financial lase contracts in the books is not an easy task. A decision if the leasing is financial or operational one is a piece of cake when compared to what has to be done afterwards. This requires knowledge about the internal rate of return and discounting of leasing instalments. If the rules are unknown, errors may occur in the recognition of leasing.

It is very difficult to determine the initial value of the leased assets and of the liability unless we use advanced spread sheets.  The question is if we understand how the spread sheets work and when all of that comes from?  There is much information that we have to take into account like e.g. the repayment schedule of the leasing instalments. This is very difficult and time consuming.

We have developed 24iValue also for such persons who do not have enough time to make calculations related to financial leasing. With our service, even people who have never performed such calculations, will perform then in a short time and accurately. 24iValue does not work like a spread sheet for financial leasing we have seen before. What is required now is input of a few pieces of information in a special online form. We know what to insert and where to get the information from as there are prompts which are displayed when the calculations are performed.

Finally, we get a specification of the present value of the lease liabilities, the book value of the leased assets, depreciation amount, amounts of interest and leasing instalments.  The final specification of such amounts can be used for posting a financial lease to the general ledger.

See how it works

Accounting for Finance Leases

FREE access to the module

This option is best if you want to check how this module works.

60£ transfer or card

Full access to the module

The option is the best if you wish to get help in order to make the required calculations for financial leasing contracts or to check whether the lease contracts are finance leases or not.

Publication date: 2018-09-26 13:33:31
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