What is a direct lease in financial leasing and how it operates

Direct financial leasing is a project involving three parties - the lessor, the lessee and the supplier, and is composed of at least two parties. The above contract is a self-contained three-party transaction composed of a sales contract and a lease contract. So, do you know how financial leasing operates?

Extended meaning

Direct financing lease (direct financing lease)

Direct financing lease means that the leasing company uses its own funds, bank loans or IPOs to raise funds in the international or domestic financial market to purchase equipment. The manufacturer purchases the equipment required by the user and then leases it to the lessee. This direct leasing method involves direct meetings between the parties to the lease, and the requirements and conditions for the three parties are very specific and direct. There is no time interval in the leasing method, the lessor has no equipment inventory, the flow of funds is accelerated, and it has higher investment benefits.

Direct financial leasing business analysis

Used by the lessor in the capital market. The funds are raised, the payment is made to the manufacturer, and the equipment is purchased and leased directly to the user (lessee). This type of lease generally includes two contracts:

(1) The lessor signs with the lessee. A lease contract;

(2) The lessor signs a sales contract with the manufacturer in accordance with the lessee’s order requirements.

In addition to the conditions for direct financial lease, it must meet the requirements of financial lease. In addition to its special features, direct financing leases must also meet the following two additional conditions:

(1) The rent (minimum lease payment) collected by the lessor from the lessee is guaranteed and reasonably predictable;

(2) There are no major uncertain factors that affect the lessor’s cost compensation, including the lessor’s commitment to the lessee to provide a wide range of services for the leased assets, or the exclusion of obsolete or outdated leased assets. Guarantee, etc. On the lease commencement date, the book value of the leased assets involved in this lease is equal to its fair value. Most leasing companies in economically developed countries generally adopt the method of direct financing leasing. Large leasing companies with strong financial strength also use this method.

Procedures for direct financial leasing

Direct financial leasing is a project involving three parties - the lessor, the lessee and the supplier. It is a self-contained trilateral transaction consisting of at least two or more contracts - a sales contract and a lease contract. The business procedures can be roughly divided into the following steps:

(1) Future The lessee (user) determines the technology and equipment to be entrusted for leasing according to its own needs and submits the following documents to the leasing agency to propose leasing entrustment:

1) Project proposal and feasibility study report or design task statement ;

2) The user has industrial and commercial registration certificates and relevant accounting statements; 3) Fill in the leasing power of attorney, and stamp the official seal of the applying unit and approving unit according to the approval authority stipulated by the state; 4) After approval by the leasing agency An irrevocable letter of guarantee issued by a recognized guarantee unit to guarantee the lessee's performance of the lease contract.

(2) The leasing agency reviews the above documents and provides the user with a preliminary rental estimate. After the guarantor's guarantee qualifications have been reviewed, approved, confirmed and agreed, the project will be initiated internally and the entrustment will be formally accepted externally.

(3) Finalize the lease conditions with the user, formulate a rental budget plan, sign a lease contract, and have the financial guarantor stamp the guarantee.

(4) The leasing agency will conduct technical and business negotiations with the user and the supplier. After the conditions are negotiated, the leasing agency will act as the buyer and the user will act as the lessee, and sign a supply contract with the seller *** .

(5) The leasing agency fulfills the purchase contract and pays the purchase price. At the same time, the supplier delivers the goods and the user accepts the goods.

(6) Notify the lessee that the lease contract has officially commenced and the lessee shall pay the rent on time according to the provisions of the lease commencement notice.

(7) When the lease period expires, the lessee can make the following choices for the leased equipment: purchase at a nominal price, renew the lease, or return the leased equipment to the leasing agency.

Business procedures for direct financial leasing

1. Select leased equipment and its manufacturers

The lessee determines the equipment that needs to be introduced based on the project’s planning requirements. Rental equipment. Then choose a manufacturer with good reputation and high product quality, and directly negotiate with them the specifications, models, performance, technical requirements, quantity, price, delivery date, quality assurance and after-sales service conditions of the equipment. If the lessee lacks understanding of the market conditions, the leasing company can also look for leasing equipment and manufacturers on its behalf.

2. Apply for entrusted leasing

The lessee must first choose a leasing company. The main purpose is to understand the financing capabilities, business scope, financing rates and other relevant information of the leasing company. After selecting a leasing company, the lessee submits an entrustment application, fills out the "Leasing Application Form" or "Lease Entrustment Letter" and submits it to the leasing company, specifying in detail the type, specification, model, performance, price, supplier, etc. of the required equipment. Matters such as scheduled delivery date and lease term, production arrangements, expected economic benefits, sources of funds to pay rent, etc. After review and approval, the leasing company signs and seals the power of attorney, indicating its official acceptance of the trust.

3. Organize technical negotiations and business negotiations, and sign a purchase contract

With the participation of the leasing company, the lessee conducts technical negotiations with the equipment manufacturer, mainly including equipment shape and quality. Guarantee, spare parts delivery time, technical training, installation and commissioning, and technical services. At the same time, the leasing company conducts business negotiations with equipment manufacturers, mainly including the price of the equipment, pricing currency, transportation method, supply method, etc. Chengzhenzhen signed a technical service agreement with the equipment manufacturer, and the leasing company signed a purchase contract with the equipment manufacturer.

4. Sign a lease contract

A lease contract is signed between the leasing company and the lessee. The main terms of the lease contract include: the leased object, ownership of the leased object, lease term, rent and Its changes, dispute arbitration, and the rights and obligations of both parties to the lease, etc. The signing of a lease contract indicates that the lessee has obtained the right to use the equipment, and the ownership of the equipment still belongs to the leasing company.

5. Financing and payment of goods

Leasing companies can use their own funds to purchase equipment, but if they are short of funds, they can raise funds through financial institutions or raise funds from the financial market Pay the equipment payment, transportation and miscellaneous expenses directly to the supplier; the leasing company can also provide the payment to the lessee first for prepayment. After the equipment arrives and the invoice is received, the payment will be settled based on the actual payment and converted to equipment leasing. .

6. Delivery and after-sales service

In accordance with the provisions of the purchase contract, the supplier will deliver the equipment to the leasing company and then transfer it to the lessee, or directly to the lessee. The lessee issues a "lease equipment acceptance list" to the leasing company as written proof that the lessee has received the leased equipment. The supplier shall send engineering and technical personnel to the factory for installation and debugging, and the lessee shall inspect and accept it.

7. Payment of rent and liquidation interest

The leasing company will calculate the lease start date based on the equipment receipt issued by the lessee. Due to some expenses that cannot be determined in advance (such as bank fees, freight and transportation insurance premiums, etc.), the leasing company will adjust the original estimated cost according to the actual expenses after paying the last payment, and send the leasing conditions to the user Change Letter.

The lessee shall pay rent according to the notice of change of lease conditions. The leasing company then repays the loan and pays interest based on the financing contract signed with the financial institution using its leasing fees and other income.

8. Transfer or lease renewal

After the lease period expires, the leasing company will transfer the ownership of the equipment to the lessee in accordance with the contract, or charge a small amount of rent to continue leasing it. If the ownership of the equipment is transferred, the leasing company must issue a "Lease Equipment Ownership Transfer Letter" to the lessee to prove that the ownership of the leased equipment has vested in the lessee.

Accounting treatment of direct financial leases

The lessor’s accounting can use the net method and the gross method. According to the net amount method, the lessor should debit the lease receivable and estimated residual value accounts and credit the fixed assets account on the lease commencement date with the net investment in the lease. According to the total amount method, the total lease investment should be debited to the lease receivable and estimated residual value accounts, and credited to the fixed assets and unrealized interest income accounts. Unrealized interest income should be gradually converted into realized interest income in the future. It can be seen that the lessor has no profit or loss on the lease commencement date. The lessee shall debit the leased asset and credit the lease payment payable and unrecognized interest expense on the lease commencement date based on the lower of the present value of the minimum lease payment and its fair value. Unrecognized interest expense should be recognized in installments during the lease term. The lessee shall also provide depreciation on the leased asset in the future.

1. Basic accounting process

(1) 1. Submit a lease application, and after the lessor accepts it, sign a financial lease contract, based on the equipment price, transportation fees, installation and commissioning fees, The sum of insurance premiums, etc. and the present value of the lease payment payable (the order of discount rates is: implicit interest rate, contract interest rate, bank loan interest rate for the same period), whichever is lower is regarded as the book value of the asset, debit? Fixed assets? Financing lease Fixed assets account, according to unpaid rent payable, etc., debit the Unconfirmed Financing Charges account; according to the total rent payable in the schedule of the financial lease contract, credit the Long-term Accounts Payable Finance Lease Payable account.

2. If the proportion of leased assets to the total assets of the enterprise is ?30, the book value of the assets can be recognized based on the total rent payable, and the "Fixed Assets" "Financing Lease Fixed Assets" account will be debited.

(2) When the lease contract is signed, the lessee should generally pay 20-30 RMB of the leased object to the lessor as the lease deposit, debit to the account "Other receivables", and credit to the bank deposit? suject. The security deposit is used to pay the last installment or installments of rent, debit ? Long-term accounts payable ? Finance lease payable ? account, credit ? Other receivables ? account.

(3) During the lease period, the lessee pays the rent on schedule, debiting the account ? Long-term payables ? Finance lease payments payable, and crediting the account ? Bank deposits? The part of the rent included in the rent is recognized as the current expense, debit the ? Financial expenses ? account, and credit the ? Unrecognized financing expenses ? account.

(4) The lessee's depreciation provision can be divided into two situations:

1. If the ownership of the leased property is transferred at the end of the contract period, the lessee will make depreciation provision based on the normal useful life. The "Manufacturing Overhead" and "Administrative Expenses" accounts are debited, and the "Accumulated Depreciation" account is credited.

2. When the contract is signed, it is not reasonably certain that the ownership of the leased property will be transferred at the end of the period, and the lessee will accrue depreciation based on the shorter of the lease term and the normal useful life (the lease term for new equipment is generally shorter than the normal useful life) ), that is, depreciation is accrued based on the lease period, and the "Manufacturing Overhead", "Administrative Expenses" and other accounts are debited, and the "Accumulated Depreciation" account is credited.

(5) When the lease term expires, the lessee obtains ownership of the leased object in two situations:

1. The lessee depreciates according to the normal service life, and the net book value of the asset is equal to The actual value of the assets should be roughly consistent. The lessee does not need to adjust the accounts. He obtains ownership at the nominal price, debits the "Long-term payables" and "financing lease payables" account, and credits the "Bank deposits" account. The nominal price is recognized as the current period. Expenses, debit "Financial Expenses" account, credit "Unrecognized Financing Expenses" account; at the same time, "Financing Lease Fixed Assets" will be converted into "Owned Fixed Assets" detailed account.

(2) Enter the account based on the assessed value of the liquidated assets, debit the "Fixed Assets" account, and credit the "Capital Reserve" account.

2. Examples

Example 1: The lessee plans to lease a new ship from the lessor. The purchase cost of the ship is set to 80 million, and the normal depreciation life of the ship is 20 years. , the lease term is 3 years, the annual interest rate of the lease is 7, the principal is recovered 26.6667 million yuan per year, the ownership is transferred at the end of the period, and the handling fee is 100 yuan.

Borrow: Fixed assets? Financing lease of fixed assets 80 million

Unrecognized financing expenses 11.2001 million

Loans: Long-term payables ? Financing lease payable 9120.01 Debit: Long-term payables? Financing lease payable 32.2667 million Loans: Bank deposits 32.2667 million Debits: Long-term payables? Financing leases payable 30.4 million Loans: Bank deposits 30.4 million Debits: Long-term payables? Financing leases payable 28.5334 million loans : Bank deposits 28.5334 million Debits: Financial expenses 3.73337 million Loans: Unconfirmed financing expenses 3.73337 million

4. Depreciation is calculated based on the normal service life (20 years), and 4 million per year is included in the current year's costs and expenses. Make the following accounting entries;

Debit: 4 million for manufacturing expenses, operating expenses, and administrative expenses. Credit: 4 million for accumulated depreciation.

5. When the lease expires, the net book value of the assets will be The actual value should be roughly consistent. The lessee does not need to adjust the accounts. He obtains ownership at the nominal price and makes the following accounting entries;

Debit: Long-term payables? Finance lease payable 0.01 million

Loan: bank deposit of 0.01 million

6. At the same time, "financing leased fixed assets" will be converted into "self-owned fixed assets" detailed account, and the following accounting entries shall be made;

Borrow: Fixed assets and equipment 80 million. Loan: Fixed assets? Financing lease of fixed assets 80 million.

Analytical opinion: The ownership transfer must be made clear when the lease contract is signed, and depreciation shall be accrued based on the normal useful life:

3. When the lease expires, the book value of the lessee’s fixed assets is 80 million, depreciation has been provided for 12 million, and the net book value is 68 million (on the asset side of the balance sheet).

Example 2: The lessee plans to lease a new ship from the lessor. The purchase cost of the ship is set to 80 million, the normal depreciation period of the ship is 20 years, the lease term is 3 years, and the annual lease rate is It is 7, and the principal is recovered 26.6667 million per year, (the date of signing the contract is unknown and the ownership will be transferred at the end of the term. Depreciation is accrued based on the lease period. It is specified in the ownership supplement agreement that the property right will be transferred at 100 yuan at the end of the term).

1. When a lease contract is signed, the lessee records the lower of the asset acquisition cost and the present value of the lease payment payable (the discount rate is generally the contract interest rate), PV= (2666.67 560) / (1 7) (2666.67 373.33) / ( 1 7 ) ( 2666.66 186.67 ) / ( 1 7 ) = 80 million, make the following accounting entries;

Borrow: Fixed assets? Financing leased fixed assets 80 million Unrecognized financing expenses 11.2001 million Loans: Long-term Accounts payable? Financing lease payable 91.2001 million

2. A. When paying the lease principal and interest in the first year, when receiving an equal amount of lease invoice issued by the lessor, make the following accounting entries;

Debit: Long-term payables? Financing lease payable 32.2667 million Loans: Bank deposits 32.2667 million

B. When paying the lease principal and interest in the second year, when receiving an equal-amount lease invoice issued by the lessor, the following accounting points will be made

Debit: Long-term payable? Financing lease payable 30.4 million Loan: Bank deposit 30.4 million

C. When paying the lease principal and interest in the third year, receive a letter from the lessor For lease invoices with equal amounts, make the following accounting entries;

Debit: Long-term payables? Financing lease payable 28.5334 million Loans: Bank deposits 28.5334 million

3. During the lease period, no Confirm financing expenses (including nominal goods price) are apportioned using the straight-line method and are recognized as expenses for the current year, and the following accounting entries are made;

Debit: Financial expenses 3.73337 million Loans: Unconfirmed financing expenses 3.73337 million

4. Depreciation is calculated based on the lease term (3 years), and 26.6667 million yuan per year is included in the current year's costs and expenses, and the following accounting entries are made;

Debit: 2666.67 yuan for manufacturing expenses, operating expenses, and management expenses Wandai: Accumulated depreciation is 26.6667 million.

5. When the lease expires, the net book value of the asset is 0, and the ownership is obtained for 100 yuan, and the following accounting entries are made;

Debit: Business External expenditure 0.01 million loan: Bank deposit 0.01 million

6. The lessee depreciates according to the lease term. The net book value of the asset (0) is very different from the actual value of the asset. The lessee can use the name of liquidation and capital verification to Evaluate the value of the asset, record it at the appraised value, set the appraised value to 60 million, and make the following accounting entries;

Debit: 60 million for fixed assets and equipment, Loan: 60 million for capital reserve, and make the following entries at the same time: Offset entry; Debit: Accumulated depreciation 80 million Credit: Fixed assets? Financing leased fixed assets 80 million Analytical opinion: The transfer of ownership is not clear when the lease contract is signed, and under the condition that depreciation is accrued based on the lease term:

1. When the lease contract is signed, the asset side of the lessee's assets and liabilities increases by 91.2001 million (fixed assets increase by 80 million, and unrecognized financing costs increase by 11.2001 million); the liability side increases by 25.0401 million (long-term payables? Finance lease payments payable) An increase of 91.2001 million).

2. The lessee will incur financial expenses of 11.2001 million during the three-year lease period, and will incur manufacturing expenses and costs of 80 million through depreciation.

3. At the expiration of the term, the book value of the lessee’s fixed assets will increase to 60 million (on the asset side of the balance sheet) after evaluation, and the capital reserve will increase by 60 million (on the liability side of the balance sheet). . ;