Hi - I have a question on lease payments.
We have leased an asset (under a finance lease) and the cost is EUR 4,000 plus VAT of EUR 920 and the payment schedule is 36 monthly payments of EUR 136.67.
Ive recognized a non current asset at cost of EUR 4,000 but I'm a little bit confused about the journal entries. Ive tried the help site but Im not 100% sure Im booking it right.
Im thinking its:
DR Assets at Cost Account 0001 - EUR 4,000 (include on VAT return)
DR VAT on purchases Account 2201 - EUR 920 (include on VAT return)
CR Hire Purchase Account 2300 - EUR 4,920 (don't include on VAT return)
For each of the monthly payments of EUR 136.67, Id go to "bank > new purchase payment > other" and book a payment of the EUR 136.67 against the supplier.
We will also receive a monthly VAT invoice for EUR 136.67.
Ive two questions I was hoping you could help with:
- The hire purchase account (2300) will show a current liability of EUR 4,920 but surely 2/3 of this is a non current / future liability. How do I book this to the "balance sheet"
- As Im recognizing the full asset at cost today, then I would also make the full VAT reclaim after the next return date at the end of June. Im assuming this is correct but can someone please let me know?
