Finance lease
For a finance lease, journal entries are generated by the Accounts Payable application, the Asset Management application, and the Lease Management application.
Example
Lease obligation of $12,000.00; monthly payment of $1,000.00; monthly interest of $80.00; no non-lease components.
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One time entries:
Program creating entries: Processing Release (AM170)
When created: When the leased asset is released. Creating and testing a lease
Account name Debit Credit Asset account* 12,000.00 Debt account** 12,000.00 * You can define the asset account when you create the asset type used for the asset.
** For the purpose of leased assets, the clearing account matches the lease debt account. Lease Management automatically uses the debt account in place of the clearing account you specified when you created the account group used for the asset.
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Monthly entries (AP):
Program creating entries: Invoice Distribution Closing (AP175)
When created: After the lease payment has been interfaced to Accounts Payable. Lease invoice processing
Account name Debit Credit Debt account 1,000.00 Accounts payable account 1,000.00 -
Monthly entries (LM):
Program creating entries: Interest Calculation (LM180)
When created: When interest is calculated. Calculating lease interest
Account name Debit Credit Debt account 80.00 Interest expense account* 80.00 * You can define the interest expense account on the Payments form tab of Lease Addition and Adjustments (LM21.1).