Amortizing Capital Leases
You can set up asset items in the Equipment Info Center for capital leases that will be amortized when you run Depreciation Processing in the Asset Management application.
The capital lease (asset item) must be created from purchasing items whose category type is Capital Item.
Vision uses the straight-line depreciation method for amortizing capital leases. In the Equipment Info Center, you identify an asset item as a prepaid item by selecting Lease in the Calculation field on the GL Book tab.
Before You Can Amortize Capital Leases Using Depreciation Processing
You must complete the following information before you can amortize capital leases in Depreciation Processing:
Location | What You Must Complete | |||||||||
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Enter a journal entry for the present value of the minimum lease payments:
Do not associate the journal entry with the capital lease asset item. |
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Equipment Info Center | Manually create an asset item for the capital lease in the Equipment Info Center. | |||||||||
GL Cost tab in the Equipment Info Center | For the capital lease asset item, enter the amount that will be amortized over the term of the lease (depreciation basis). To do this, you enter a row in the Acquisition Cost grid on the GL Cost tab, with the following information:
The amount to amortize applies for both your GL book and any additional books that you set up, which display on the Additional Books tab in the Equipment Info Center. On the Additional Books tab, you can also enter additional cost information to change the amortization amount (depreciation basis) for additional books as needed. |
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GL Book tab in the Equipment Info Center | For the capital lease asset item, enter the following information on the GL Book tab, which applies for your general ledger book:
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Additional Books tab in the Equipment Info Center | For the capital lease asset item:
If you set up any additional books to calculate depreciation or amortization differently from your general ledger book, the following items apply specifically for leases when you complete the information in the grid on the Additional Books tab and in the fields below the grid for each row in the grid:
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Depreciation Processing
You process monthly amortization by running Depreciation Processing in the Asset Management application. When you run depreciation processing for your GL Book, the follow journal entries are created for your general ledger:
Account | Debit | Credit |
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Capital Lease Amortization Expense (Profit and Loss Statement) | X | |
Accumulated Amortization of Lease Expense (Balance Sheet) | X |
These general ledger entries do not apply for any additional books that you set up.
Accounts Payable Payment Processing
When you complete an AP Payment Processing run to make a monthly lease payment, the following entries are created for your general ledger:
Account | Debit | Credit |
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Lease Obligations (Balance Sheet) | X | |
Interest Expense (Profit and Loss Statement) | X | |
Property Tax (Profit and Loss Statement) | X | |
Cash (Balance Sheet) | X |