08-02-2005, 04:07 AM
As long as you are satisfied that finance lease exists, the question that seller is not leasing company can be safely ignored.
I am content with your treatment that x (being the cost element) should be capatilised. Decpn charge/appropriate capital allowances.
Now there is a question of x+Y. where y being the interest, correct?
Actually when i referred to x-y, what I was trying to refer was that cost less any discounts. Why discounts? (if it were a second hand machiner). but lets ignore the equation and get back to the scanerio.
the element of Y will be paid over the life time of lease, correct?
if so then we have to find a place in the financial statements to write off the payment. I think it can be safely classified under the heading of "Interest payable and similar charges".
so capital allowances on the cost element + full interest payments will escape tax. if there is tax, obviously.
I am content with your treatment that x (being the cost element) should be capatilised. Decpn charge/appropriate capital allowances.
Now there is a question of x+Y. where y being the interest, correct?
Actually when i referred to x-y, what I was trying to refer was that cost less any discounts. Why discounts? (if it were a second hand machiner). but lets ignore the equation and get back to the scanerio.
the element of Y will be paid over the life time of lease, correct?
if so then we have to find a place in the financial statements to write off the payment. I think it can be safely classified under the heading of "Interest payable and similar charges".
so capital allowances on the cost element + full interest payments will escape tax. if there is tax, obviously.
