I am looking to understand the correct double entry accounting method for an electric car leased by a company. The car is leased for a 3-year term and will be returned at the end of the period. Based on my understanding, this situation qualifies as an operating lease.
The HMRC guidance document BLM12020 and BLM00060 suggest that the monthly double entry should look like Dr: Car Expense Cr: Bank. Furthermore, according to the guidelines, there should be no entry on the balance sheet, as the lessee does not bear the risk or rewards of ownership of the car.
Am I correct in my understanding? Or is the double entry more complicated than that?
Any insights would be greatly appreciated. Thank you!