The lessee's treatment of finance leases:
The beginning of the lease term:
Borrow: Fixed Assets-Financial Leased Fixed Assets (the lower of the fair value of the leased asset or the present value of the minimum lease payments) Unrecognized Finance Costs.
Loan: Long-term payable - finance lease payable (minimum lease payments)
Determination of discount rate (when calculating the present value of the minimum lease payments, the discount rate can be determined in the following order).
Lessor's lease embedded interest rate;
Interest rate specified in the lease contract;
Bank lending rate for the same period.
Treatment of initial direct costs - handling fees, legal fees, travel expenses, stamp duty, etc., which are credited to the value of the leased asset:
Borrow: Fixed Assets - Fixed Assets under Finance Lease (Initial Direct Costs)
Credit: Bank deposits, etc.
Treatment of apportionment of unrecognized financing costs - apportionment based on the effective interest rate method.
Amortization of unrecognized financing costs for each period = (opening balance of long-term payables for each period - opening balance of unrecognized financing costs) x effective interest rate
Extended information:
Financing The financial leasing business itself does have two market functions of financing services and trade services. It is obviously not appropriate to define whether a financial leasing company is a financial institution engaged in financing services or a non-financial trade organization engaged in promoting the circulation and sale of leased goods by the market function possessed by the financial leasing business.
Financial leasing company engaged in debt investment business to the lessee is financing services, with the nature of financial services. But it is not the institutions that provide financial leasing services are necessarily financial institutions. Whether the financial leasing company itself is a financial institution is determined solely by the background of the company's shareholders and the scope of business acquired by the company in accordance with the relevant regulations of the market access standards.
Baidu Encyclopedia-Financial Leasing