If your company lease copy copying machine on finance lease basis, e.g. gain the ownership of the machine at the end of the lease, whether you will capitalize the asset or just expense it monthly?
As the amount is not material, i think it is ok to just treat it as operating lease, right?
Thanks!
if it is a "token" amount, like the famous $1 buyout at the end of the lease...it is a capitial lease and should be listed and depreciated...i believe....
On Sun, 1 Jan 2006 19:04:08 +0800, in alt.accounting "bbbu" wrote in :
It should be capitalized at lease signing along with liability of the lease payments.
On Sun, 01 Jan 2006 09:54:14 -0600, in alt.accounting David Jensen wrote in :
I just noticed that you were posting from Hong Kong. I gave you a GAAP answer. IAS may differ.
I'm not really up to date with IAS (or GAAP), but "in the old days" materiality was certainly a criterion for such decisions. The other answers seem to ignore this. If "the amount" is not material, any differences between the accounting methods might be so small as to get lost in rounding, so I think you are right - it may not be "correct", but it's probably OK to treat it as an operating lease on the basis of materiality.
I know at least one publicly-traded US company that uses this logic. I've discussed with several licensed practising public accountants who all accept this logic.
But - if you are concerned about IAS, presumably your accounts are audited. So why don't you ask your auditor?
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