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We have just taken up a Lease Agreement on a Photocopier and they will debited our account each month. I was wondering how I enter this in MYOB, is it allocated directly to an expense account or do I set up a Liability account?
Thanks in Advance.
There are few steps involved with asset leasing.
Step 1: Create two liability accounts:
Step 2: Create one Asset account
Step 3: Do Journal entry
DR----- Computer Hardware & Software A/c (For whole amount of Lease) (CAP tax code)
CR---- Photocopier Lease A/C (For only total Lease amount) (NT Tax code)
CR---- Less Unexpired Interest Charges (For interest Charge only) (NT Tax code)
Once that’s done – you will be doing spend money entry each month for lease amount.
Effect should be:
Dr ----- Photocopier Lease A/C (by lease amount) (GST Tax code)
Cr----- Bank a/c
This is the treatment for lease in your MYOB. Your accountant must know how to deal with these figures during tax return time. Hope this helps. Thank you.
How this is set up really depends on the agreement. A lot of leases are exactly that, a lease, or in other words a hire of equipment with title to the goods never passing.
Then there are some that will have title passing on exchange of $1.00 at the end of the lease term so the actual agreement documents need to be looked at prior to deciding what entries need to be passed.
June 2012 - last edited June 2012
As a backup to what Julie says
Don't for get if you are "Leasing" "Hire Purchase" (in the proper usage of the word) a photocopier then the photocopier belongs to the company you are leasing from so you cannot claim GST up front unless it is a Chattel Mortgage.
You can then only claim the GST on each payment.
If it is a lease then every payment may contain an element of Stamp Duty which of course is GST Free.
No doubt someone will disagree with me however only when the ownership of the goods transfers can you claim the full amount of the GST up front.
What do you think Julie?