What Is a Direct Financing Lease?

Direct financial leasing refers to a method in which a leasing company uses its own funds, bank loans or IPOs to raise funds in international or domestic financial markets, purchase equipment required by users from equipment manufacturers, and lease it to leased companies Main financing leases. This direct leasing method is that the parties to the lease meet directly, and the requirements and conditions of the three parties are very specific and clear. The direct leasing method has no time interval, the lessor has no equipment inventory, the capital flow is accelerated, and the investment efficiency is high.

Direct finance lease

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Direct financial leasing refers to the use of leasing companies

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In addition to the conditions of direct financial lease,

Procedures for direct financial lease Direct financial lease is a process involving three parties-

The lessor's accounting can use both the net method and the gross method. According to the net amount method, the lessor shall debit the lease receivable and estimated residual value account with the leased net investment and credit the fixed asset account on the lease start date. According to the gross method, the total lease investment should be used to debit the lease receivables and estimated residual value accounts, and credit the fixed assets and unrealized interest income accounts. In the future, unrealized interest income should be gradually converted to realized interest income. It can be seen that the lessor did not make profit or loss on the lease start date. The lessee shall debit the leased asset at the lease start date and credit the lease payable and unrecognized interest expenses at the lower of the present value of the minimum lease payment and its fair value. Unrecognized interest expenses shall be recognized in installments during the lease term. The lessee should also depreciate the leased assets in the future.

1. Basic Accounting Process

(1) 1. After submitting the lease application, after the lessor accepts it, sign the financial lease contract, according to the sum of the equipment price, transportation costs, installation and commissioning costs, insurance costs, etc., and the present value of the lease payments payable (the order of discount rates is: Internal interest rate, contract interest rate, and bank loan interest rate for the same period) The lower one is recorded as the asset's book value, which is debited to the "Fixed AssetsFinancial Lease Fixed Assets" account, and the "unrecognized financing cost" is debited based on the unpaid lease interest payable. Account; according to the total rent payable in the schedule of the financial lease contract, credit the long-term payables-the account of the financial lease payable.

2. If the proportion of the leased assets to the total assets of the enterprise is 30%, the book value of the assets can be confirmed according to the total rent payable, debit the "Fixed AssetsFinancial Lease Fixed Assets" account, and the rent payable according to the schedule of the financial lease contract The total amount is credited to the account titled "Long-term Payables-Payable Finance Lease"

(2) When the lease contract is signed, the lessee should normally pay the lessor 20-30% of the leased object as the lease security, debit the account of "other receivables", and credit the account of "bank deposits". The security deposit is used to pay the last installment or leases, debit the account of "long-term payables-finance lease payable", and credit the account of "other receivables".

(3) During the lease period, the lessee pays the rent on schedule, debits the account of long-term payables finance lease payables, and credits the account of bank deposits. The part of the rental interest included in the rent is recognized as the current expense, the "financial expense" account is debited, and the "unrecognized financing expense" account is credited.

(4) The lessee accrues depreciation in two cases:

1. At the end of the contract period, the ownership of the leased object will be transferred. The lessee will make depreciation based on the normal service life, debit the "manufacturing expenses", "administrative expenses, etc." subjects, and credit the "accumulated depreciation" subjects.

2. When the contract is signed, it cannot be reasonably determined that the ownership of the leased object is transferred at the end of the period. The lessee depreciates the lease based on the shorter lease period and the normal service life (the lease period of the new equipment is generally shorter than the normal service life), that is, calculated on the lease Withdraw depreciation, debit subjects such as "manufacturing expenses", "management expenses", and credit "accumulated depreciation" subjects.

(5) When the lease term expires, the lessee acquires the ownership of the leased object in two cases:

1. The lessee depreciates according to the normal useful life. The net book value of the asset and the actual value of the asset should be substantially the same. The lessee does not need to adjust the account, acquires the ownership at the nominal price, and debits the "long-term payables-payable financing lease" account. , Credit the bank deposit account, confirm the nominal price as the current expense, debit the "financial expense" account, and credit the "unrecognized financing expense" account; at the same time, convert "finance leased fixed assets" to "own-owned fixed assets" Detail subjects.

2. The lessee depreciates according to the lease term. The net book value of the asset (almost 0) is very different from the actual value of the asset. The lessee can evaluate the value of the asset in the name of liquidation and verification of capital, which is recorded at the value of the assessment.

(1) Obtain ownership at the nominal price of goods, debit the account of "long-term payables-finance lease payable", credit the account of "bank deposits", confirm the nominal price of goods as current expenses, debit the title of "financial expenses", and credit Record the "Unrecognized Financing Expenses" account.

(2) Based on the appraisal value of cleared assets, debit the account of "fixed assets" and credit the account of "capital reserve".

1. Examples

Example 1: The charterer intends to lease a new ship to the lessor, setting the ship's purchase cost to 80 million, the normal depreciation period of the ship to be 20 years, the lease period to be 3 years, and the annual lease rate to be 7%. A total of 26.667 million was recovered, and the ownership was transferred at the expiry date, with a handling fee of 100 yuan.

1. Signing a lease contract. The lessee will record the lower value of the asset purchase cost and the present value of the lease payable (the discount rate is generally the contract interest rate). PV = (2666.67 + 560) / (1 + 7%) + (2666.67 +373.33) / (1 + 7%) + (2666.66 + 186.67) / (1 + 7%) = 80 million, make the following accounting entries;

Borrow: Fixed assets-80 million fixed assets financed by lease

Unrecognized financing costs

Loan: Long-term payables-91.201 million payables in finance leases

2. A. When the principal and interest of the lease are paid in the first year, an equivalent lease invoice issued by the lessor is received and the following accounting entries are made;

Borrowings: long-term payables-payables to finance leases

Loan: bank deposits 32.267 million

B. When paying the principal and interest of the lease in the second year, an invoice for the same amount of lease issued by the lessor is received, and the following accounting entries are made;

Borrowings: long-term payables-30.4 million payable in finance leases

Loan: bank deposits of 30.4 million

C. When paying the principal and interest of the lease in the third year, an equivalent lease invoice issued by the lessor shall be received for the following accounting entries;

Borrow: long-term payables-28,533,400 finance lease payments payable

Loan: bank deposits of 28.533 million

3. During the lease period, the unrecognized financing expenses (including the nominal price of goods) are apportioned using the straight-line method, and the expenses are recognized in the current year, and the following accounting entries are made;

Borrowing: 3.733337 million financial expenses

Loan: Unrecognized financing expenses of 3.733337 million

4. Depreciation is calculated based on the normal service life (20 years), 4 million a year is included in the current cost and expenses, and the following accounting entries are made;

Borrowing: 4 million manufacturing expenses, operating expenses, management expenses

Loan: Accumulated depreciation of 4 million

5. When the lease term expires, the net book value of the asset and the actual value of the asset should be substantially the same. The lessee does not need to adjust the account, and acquires the ownership at the nominal price of the goods, as the following accounting entries;

Borrowings: long-term payables 10, 000 finance lease payments payable

Loan: bank deposit of 0.01 million

6. At the same time, turn the "Financial Leased Fixed Assets" into "Owned Fixed Assets" detailed accounts and make the following accounting entries;

Borrow: fixed assets ×× equipment 80 million

Loan: Fixed assets-80 million fixed assets financed by lease

Analysis opinion: When the lease contract is signed, the ownership transfer is clearly defined, and under the condition that depreciation is accrued based on the normal service life:

1. When the lease contract was signed, the asset side of the lessee s assets and liabilities increased by 91.201 million (fixed assets increased by 80 million and unrecognized financing expenses increased by 11.210 million); the debtor increased by 25.041 million (long-term payables-payable finance lease payments increased by 9120.01 Million).

2. The lessee enters financial expenses of 11.201 million during the three-year lease period, and through depreciation, it enters manufacturing expenses, and then enters the cost of 400 × 3 = 12 million.

3. When the lease term expires, the book value of the fixed assets of the lessee is 80 million, the depreciation has been raised to 12 million, and the net book value is 68 million (on the balance sheet asset side).

Example 2: The charterer intends to lease a new ship to the lessor, set the ship's purchase cost to 80 million, the normal depreciation period of the ship to be 20 years, the lease period to be 3 years, and the annual lease rate to be 7%. A total of 26.667 million was recovered, (the transfer of ownership is not guaranteed at the expiry date of the contract, depreciation is accrued based on the lease term, and it is specified in the supplementary ownership agreement to transfer the property right at 100 yuan).

1. Signing a lease contract. The lessee will record the asset purchase cost and the present value of the lease payable (the discount rate is generally the contract interest rate). PV = (2666.67 + 560) / (1 + 7%) + (2666.67 +373.33) / (1 + 7%) + (2666.66 + 186.67) / (1 + 7%) = 80 million, make the following accounting entries;

Borrow: Fixed AssetsFinancial lease of 80 million fixed assets

Unrecognized financing costs

Loan: Long-term payables-91.201 million payables in finance leases

2. A. When paying the principal and interest of the lease in the first year, an equivalent lease invoice issued by the lessor is received, and the following accounting entries are made;

Borrowings: long-term payables-payables to finance leases

Loan: bank deposits 32.267 million

B. When the principal and interest of the lease are paid in the second year, an equivalent lease invoice issued by the lessor is received for the following accounting entries;

Borrowings: long-term payables-30.4 million payable in finance leases

Loan: bank deposits of 30.4 million

C. When the principal and interest of the lease are paid in the third year, an equivalent lease invoice issued by the lessor is received, and the following accounting entries are made;

Borrow: long-term payables-28,533,400 finance lease payments payable

Loan: bank deposits of 28.533 million

3. During the lease period, the unrecognized financing expenses (including the nominal price of goods) are apportioned using the straight-line method and recognized as the expenses of the current year as the following accounting entries;

Borrowing: 3.733337 million financial expenses

Loan: Unrecognized financing expenses of 3.733337 million

4. Depreciation is calculated according to the lease term (3 years), and 266.6667 million per year are included in the cost and expenses of the year, and the following accounting entries are made;

Borrowing: manufacturing expenses, operating expenses, management expenses

Loan: Accumulated depreciation of 26.667 million

5. When the lease term expires, the net book value of the asset is 0, and the ownership is acquired at 100 yuan, which is used as the following accounting entry;

Borrow: Non-operating expenses 0.01 million

Loan: bank deposit of 0.01 million

6. The lessee depreciates according to the lease term. The net book value of the asset (0) is very different from the actual value of the asset. The lessee can evaluate the value of the asset in the name of liquidation and verification of capital, and enter the value in the account. 60 million for the following accounting entries;

Borrow: Fixed assets-60 million equipment

Loan: 60 million capital reserve

Also make the following offset entries;

Borrow: 80 million accumulated depreciation

Loan: Fixed assets-80 million fixed assets financed by lease

Analysis opinion: When the lease contract is signed, the ownership transfer is not clear, and under the conditions that depreciation is accrued over the lease term:

1. When the lease contract was signed, the asset side of the lessee s assets and liabilities increased by 91.201 million (fixed assets increased by 80 million and unrecognized financing costs increased by 11.201 million); the debtor increased by 25.041 million (long-term payables payable finance lease payments increased by 9120.01 Million).

2. The lessee enters financial costs of 11.201 million during the 3-year lease period, and enters manufacturing costs through depreciation, which in turn costs 80 million.

3. At the end of the term, the lessee's book value of the fixed assets after assessment will increase to 60 million (on the balance sheet asset side) and the capital reserve will increase by 60 million (on the balance sheet liability side).