Equipment Lease Bookkeeping Question

by Gregg Johnson
(San Jose, CA USA)

Equipment Lease

We have leased equipment. The lessee has paid us $50000 against the total amount of the equipment, which is $550,000.

They will lease the equipment from us over three years after which time they will purchase the equipment for $1.00.

The principal lease amount is $500,000. We are borrowing $500,000 to pay for the equipment. The lease payment will include 1/36 of the principal amount plus interest.

The interest we are charging has a coverage of 1.2 over the interest we will be charged.

My question is to what GL accounts do I post the following?

1) The $50k payment
2) The monthly income from the lease payment

Thanks. Gregg Johnson

Item on Reports: Plant, Property Equipment

How does QuickBooks track a specific line item over time? Does the number remain consistent over the years, or does it fluctuate? I'm trying to understand a report.

Office Equipment

by Ben
(SINGAPORE)

How should I record the transaction if I purchased office equipment for $350 in 2018, and then in 2022, my supplier offered a trade-in deal for my old equipment where I only had to pay an additional $50 for new equipment?

Office Equipment Traded and Purchased

How do I record a transaction in my General Journal where I purchased a new computer for $3,300 including GST, traded in my old computer for $220 including GST, and obtained a bank loan for the remaining difference?

Property, Plant and Equipment

by Carol
(NJ)

What kinds of things are usually reported under property, plant and equipment?

Assets that are used in the business are reported as Property, plant and equipment on the balance sheet. These assets include things like buildings, land, office equipment, vehicles, machinery, furniture and fixtures.

Additionaly, accumulated depreciation of these assets is found on the balance sheet under property, plant and equipment. These assets are also often described as plant assets or fixed assets.

Learn more about the Balance Sheet and the types of accounts reported there.

Purchasing Equipment

by Steph
(Hawaii)

As to purchasing equipment, when I write the check for anything over $500.00 I want in as a fixed asset. What are the steps to doing this. I thought I write a check to fixed asset , but it then doesn't show in my P&L for the month.

What am i missing here?

Thanks
Steph

Hi Steph,

Good question. You are correct that when purchasing assets over $500, you will post to the Asset account (by crediting the Bank account and debiting the Asset account).

This transaction will not show on the P&L for the month as both of the accounts affected are Balance Sheet accounts. Therefore, you will find the transaction on the month end balance sheet instead.

Then at the end of year, you will post an adjusting entry to expense the depreciation on the asset. If you were to take a section 179 deduction, you would credit the entire $500 to the accumulated depreciation account (subdirectory of the asset account) and debit the depreciation expense account. At which point it would show up on the end of year P&L statement.

 SUBSCRIBE to YOUTUBE

PINTEREST