Partmership

Balance c/d

PLCA
Bank/payments balance b/d
Discounts received Purchases
Purchases returns
sales ledger contra
Balance c/f

In the accounts of the lessee:
• Operating lease – the hire payments are shown in the profit and loss account as revenue expenditure.
Operating lease – a short-term lease under which the asset is likely to be hired to several lessees.
Operating leases are usually for short-term rentals of equipment. The lease company retains the ownership and all the risks and rewards which go with it. The payments are charged to the profit and loss account. There is no record of the asset in the balance sheet because the equipment will never belong to you.
• Finance lease – the asset is capitalized and the accounts show Finance lease – a long-term lease under which the asset is likely to be rented to only one lessee.
A finance lease is a longer term commitment. The value of the asset appears in your balance sheet, less any accumulated depreciation. The amount outstanding to the lease company is shown in liabilities. In the profit and loss account the interest charge and the depreciation charge are shown.
–in the balance sheet, the cost of the fixed asset (excluding interest), less provision for depreciation.
–in the profit and loss account, interest due for the year to the lessor, and depreciation on the asset for the year.
–in the balance sheet, a liability for future leasing payments (excluding and long-term liabilities.

Fixed asset register:
• Date of purchase
• Description
• Method of finance
• Rate of depreciation
• Method of depreciation
• Depreciation charges for each period
• Accumulated depreciation
• Net book value
• Disposal date
• Disposal proceeds
• Expected lifetime
• Expected residual value

Reasons why a fixed asset register should be kept (three reasons):
• it shows the individual record of each fixed asset
• it enables a business to keep control of fixed assets
• it enables depreciation to be...