The finance lease accounting journal entries below act as a quick reference, and set out the most commonly encountered situations when dealing with the double entry posting of finance or capital leases.
In each case the finance lease accounting journal entries show the debit and credit account together with a brief narrative. For a fuller explanation of journal entries, view our examples section.
Typical Finance Lease Accounting Journal Entries
| Account | Debit | Credit |
|---|---|---|
| Fixed assets | XXX | |
| Lease liability | XXX | |
| Cash | XXX |
| Account | Debit | Credit |
|---|---|---|
| Depreciation expense | XXX | |
| Accumulated depreciation | XXX |
| Account | Debit | Credit |
|---|---|---|
| Lease Liability | XXX | |
| Interest | XXX | |
| Cash | XXX |
| Account | Debit | Credit |
|---|---|---|
| Insurance expense | XXX | |
| Maintenance expense | XXX | |
| Cash | XXX |
A Note on Operating Leases
The other form of lease is an operating lease, in this case the rental payments are simply recorded on a straight line basis as operating expenses.
| Account | Debit | Credit |
|---|---|---|
| Rental expense | XXX | |
| Cash | XXX |
Finance Lease Accounting Journal Entries August 18th, 2017