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Hire Purchase Lease

Hire Purchase Lease

We are in the process of finalising a HP agreement with a leasing company.

We have already recognised the asset and the invoice has been paid to the supplier.

we will be selling the assets to the leasing company and leasing it back.

What is the accounting treatment for this transaction.

So we have DR Asset CR Bank

As we are raising a sales invoice to the leasing company, we want to be cautious as we do not want this sale of asset to increase our turnover. 

So how do we go about this.

Assets will continue to sit on our balance sheet but somehow we need to recognise a Lease Creditor on our Balance Sheet. 

Can you please explain the accounting treatment for this.



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02nd Dec 2012 14:54


To bring the asset and hp finance into the books

DR - Fixed Asset Account
CR - HP Purchase Loan Account (Excluding interest)


I the reason you do not want to include the asset as turnover VAT?

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