interest on an asset thats financed
interest on a lease is written back monthly between the amortized interest account and the income statement account interest paid .
Entries are as follows
Accounting entries for Assets purchase on Lease agreement
For total cost (Balance Sheet) when asset is purchased :
DR - Fixed Asset Account Vehicles
DR – amortized interest
DR – vat
Dr – bank charges CR - HP Purchase Loan Account
For monthly lease repayments:
DR - HP Purchase Loan account CR - Bank
Depreciation of Asset:
CR - Fixed Asset (Balance sheet) DR - Depreciation Account (P&L)
My answers
interest on an asset thats financed
interest on a lease is written back monthly between the amortized interest account and the income statement account interest paid .
interest on an asset thats financed
Entries are as follows
Accounting entries for Assets purchase on Lease agreement
For total cost (Balance Sheet) when asset is purchased :
DR - Fixed Asset Account Vehicles
DR – amortized interest
DR – vat
Dr – bank charges
CR - HP Purchase Loan Account
For monthly lease repayments:
DR - HP Purchase Loan account
CR - Bank
Depreciation of Asset:
CR - Fixed Asset (Balance sheet)
DR - Depreciation Account (P&L)