UK Lease

[Games]

Is anyone knows what is the double entry for lease?
For example i have a lease £50,000 for 5 years and is operating lease.
Thanks

 

[Games]

Lease for 5 years £50,000 - office lease, operating lease

Is it right if i just DR Rent Expenses and CR Accruals with 833.33 every month? (50000/5/12)
and when the payment have been made I relise the accruals DR Accruals CR Bank.

or

Do I have to show in my book the £50000?

Please help

Many thanks

 

[hrashed]

As long as you have lease contract that specify how much the annual rent that you should pay. And the lease amount is predetermined and can not be changed. Means, You are obliged to pay only 10,000 per year, and the amount will not be changed. And you should pay the amount at the end of each year. The accounting entry will be as follow:
Dr. Rent Expenses $833.33
Cr. Accounts Payable - Leasehold owner $833.33

And when you pay the lease, debit accounts payable and credit bank or cash. For your information, there is different between accrued expenses and accounts payable


http://hamrconsult.yolasite.com/

 

[Games]

Thanks for your help, but is it correct with Accruals as well or is needs to go under Accounts Payable? Accruals, accounts payable both are current liabilities.

Thanks

 

[Truemanbrown]

Thanks for your help, but is it correct with Accruals as well or is needs to go under Accounts Payable? Accruals, accounts payable both are current liabilities.

Thanks

I iamgine that the landlord will issue an invoice every month or quarterly. These invoices will go through Accounts Payable. Obviously, you would post an accrual or a prepayment at the year end so that the financial statements reflect the correct annual charge.

 

[Triest123]

Lease for 5 years £50,000 - office lease, operating lease

Is it right if i just DR Rent Expenses and CR Accruals with 833.33 every month? (50000/5/12)
and when the payment have been made I relise the accruals DR Accruals CR Bank.

or

Do I have to show in my book the £50000?

Please help

Many thanks

=> Do you make a monthly rental payment for the lease at the beginning of each month ??