Financial Leasing Lessee'S Accounting Judgment And Policy Choice

First, the basic accounting policy of financial leasing lessees is to capitalization of such leases.

To the lessee, the right to use the leased assets is accounted for as assets, and depreciation is depreciated according to the depreciated assets, while the irrevocable obligations to pay rent are indebted.

The determination of the amount of the amount of the leased assets and liabilities has two kinds: the total method and the net method. The former can clearly reflect the financial condition of the leased parties, and can provide more information in relative terms. Therefore, China's accounting standards adopt the total amount method.

Specifically, in general, assets are accounted for at no more than the fair market value of their lease days (our country is the book value, the same below). Liabilities are recorded on the total amount payable in the future (i.e. non discounted). The difference between the two is recorded separately as "unrecognized financing fees" and then a systematic and reasonable apportionment is made according to the accrual basis principle during the lease period.

Therefore, the basic points of the lessee's financial leasing accounting are three: the confirmation and measurement of the leased assets and liabilities on the beginning of the lease; the apportionment of the cost of financing during the lease term; and the depreciation of the leased assets.

In every aspect, there is the choice of accounting policy.

The confirmation and measurement of the leased assets and liabilities at the beginning of the lease.

The amount of liabilities is determined as mentioned above.

As for the determination of the entry amount of the leased assets at the beginning of the lease, the prevailing practice is to take the lower two persons in the following amount: (1) the fair value of the leased assets at the beginning of the lease and (2) the present value of the minimum lease payment on the date of the lease.

The practice is based on the fact that the expenditure incurred by the lessee during the lease period due to the minimum lease payment is made up of two parts: one is the expenditure incurred on the use of the leased assets and the remuneration related to the leased assets (the amount equivalent to the present value of the fair value of the leased assets or the minimum lease payment on the date of the lease), which is similar to the price paid for the purchase of assets, which is the capital expenditure on the beginning of the lease, and the other is the interest expense paid by the owner of the lessor's funds, which belongs to the proceeds of the various periods.

Only one of the capital expenditures can be used as the cost of leasing assets, otherwise, it will confuse two different kinds of expenditure, and at the same time, it will lead to a false increase in the book value of the leased assets, which violates the principle of historical cost and does not conform to the principle of prudence.

In this way, in order to determine the accounting value of the leased assets in the comparison, it is necessary to determine the present value of the minimum lease payment and to choose an appropriate discount rate.

The apportionment of unrecognized financing charges.

Under the finance lease, the rent paid by the lessee to the lessor contains two parts: principal and interest.

The rent payable by the lessee should be assessed during the lease term. On the one hand, the long-term payable (principal part) should be reduced. On the other hand, the unrecognized financing cost should be recognized as the financing cost (interest portion) of the current period in a reasonable way.

In order to reasonably apportion unrecognized financing expenses, an appropriate rate of allocation should be selected according to the specific circumstances.

About the depreciation of leased assets.

In the case of financial leasing, the lessee shall depreciate the leased assets in comparison with his own fixed assets because the main remuneration and risks of the ownership of the leased assets have been pferred from the lessee to the lessee.

To this end, the lessee should determine the period of depreciation and the method of depreciation.

As the standard of financial leasing affects the determination of the period of depreciation of the lease assets, the determination of the period of depreciation of the lease assets is different in different lease agreements.

The traditional depreciation methods of leasing assets generally include straight-line method, annual sum method, double declining balance method and so on.

However, in practice, the choice of depreciation methods is mostly influenced by the tax law.

Two, the main judgment of the lessee in dealing with the above accounting problems is 1. How to determine the discount rate of the minimum lease payment and determine the current value of the minimum lease payment is not only related to the judgement of the type of lease, but also to the determination of the value of the leased assets.

In the case of a minimum lease payment, the discount rate becomes the decisive factor affecting the size of the present value.

In view of this, most of the standard setting bodies stipulate the discount rate used by the lessee to calculate the present value of the minimum lease payment. Although the discount rate may vary, if the international accounting standard stipulates that the interest rate of the lease should be preferred, the United States requires the current loan interest rate to be the preferred discount rate.

Because the interest rate of the lessor's lease usually reflects the real financing cost of the lessee, it is more reasonable for the lessee to take the interest rate as the discount rate.

There are two reasons why the lessee should know the interest rate of the lessor, which is known to be lower than the loan interest rate, as the preferred discount rate. First, the interest rate used by the lessor is more objective than that of the lessee, because if the professional leasing company acts as a lessor, its interest rate is public, as the insurance company calculates all kinds of guarantees, and its interest rate is open to public inspection.

Second, in order to prevent the lessee from whitewashing his debt paying ability, generally accepted accounting principles do not advocate that the lessee uses higher borrowing interest rates.

If a higher borrowing interest rate is used, the present value coefficient is small, and the calculated minimum lease payment present value is small, which may be less than 90% of the fair value of the leased asset (our country is the original value of the book). The result may result in the operation of the financing lease as a business lease, forming the so-called "off balance sheet financing", distorting the financial ratio and artificially improving the lessee's solvency.

If the lessee does not know that the lessor's interest rate is included in the lease, he will need to find other interest rates.

According to the situation of our country, there are two main options which are interest rate stipulated in the lease contract and bank lending rate in the same period.

Generally speaking, the rental contract stipulates a contract interest rate. This interest rate is the interest rate accepted by both sides of the lease. It reflects the interest level of the lessee's actual burden and is more relevant than the interest rate of the bank in the same period. Therefore, if the lessee does not know that the lessor's interest rate is included in the lease, the interest rate of the lease contract is also objective and true.

However, if the interest rate of the lessor and the interest rate stipulated in the lease contract can not be known, the rental interest rate of the lessor is usually higher than that of the bank loan interest rate at the same time. Using the interest rate of the same period bank loan can make the present value of the minimum lease payment larger, and it is easy to comply with the requirement that the minimum value of the lease payment is almost the same as the original book value of the leased asset at the beginning of the lease.

Moreover, from the point of view of practical operation, the interest rate of bank loans is easier to obtain.

2, how to determine the entry value of the leased assets and liabilities at the beginning of the lease in our country, usually the lessee should use the lower value of the original value of the leased assets and the current value of the minimum lease payment as the accounting value of the leased assets, and use the minimum lease payment as the entry value of the liabilities. The difference between assets and liabilities is recorded as unrecognized financing charges.

However, when the leased asset occupies a small proportion of the total assets of the enterprise, the lessee can record the leased assets and corresponding liabilities on the basis of the same amount at the beginning of the lease. Accordingly, the "unrecognized financing cost" is zero.

The same amount can be the minimum rental payment, or the lower of the original value of the leased asset and the present value of the minimum lease payment, which the lessee can choose by himself.

The "proportion is not big" here, usually refers to the total amount of assets leased into the assets is less than 30% of the total assets of the lessee (including 30%).

It is obvious that when tenants are inclined to adopt the minimum lease payments to record the leased assets and liabilities, they can compare the leased assets with the total assets before choosing the discount rate, so as to decide whether or not to use the simple method of not calculating the "unrecognized financing charges".

When the ratio of the leased assets to the total assets is less than 30%, the lessee's judgment is limited to: (1) the amount of the leased assets and liabilities, (2) the depreciation period.

3, how to determine the apportionment method and the rate of allocation of unrecognized financing expenses. When the lessee records the unrecognized financing charges, it is necessary to adopt certain methods to apportion the unrecognized financing expenses.

In our country, the lessee can use the real interest rate law (or "interest law"), or the straight-line method and the annual sum method.

When the real interest rate method is adopted, the discount rate should be used as the rate of allocation. However, because of the different accounting value of the leased assets at the beginning of the lease, the choice of the cost sharing rate is different.

4, how to determine the depreciation of the leased assets during the old policy and the depreciation period, the lessee should adopt the depreciation policy consistent with the depreciated assets.

If the lessee or his third party concerned has provided a guarantee for the remaining value of the leased assets, the total depreciable amount shall be the balance after the value of the fixed assets is deducted from the value of the guarantee after the date of commencement of the lease. If the lessee or the third party concerned does not provide guarantee for the remaining value of the leased assets, the total depreciation amount shall be the accounting value of the fixed assets of the lease beginning date.

When determining the depreciation period of leased assets, the company shall consider the specific provisions of the lease contract.

If it can be reasonably determined that the lessee will have the ownership of the leased assets at the expiration of the lease term, he can assume that the tenant has all the useful life of the asset. Therefore, the useful life of the leased asset on the date of the lease shall be used as the depreciation period; if it cannot be reasonably determined whether the lessee can acquire the ownership of the leased asset after the expiration of the lease term, the shorter period of the lease and the shorter life term of the leased asset shall be used as the depreciation period.