UK Help with depreciation of a lease for a functional budget?

[jameshyde]

Hello guys,

New to the forum here. I'm currently studying my HND in accounting and I'm doing the graded unit 2 project at the moment. We've not been given any help by our lecturers and I'm currently stuck with the functional budget.

So me as a company is leasing a plane over a five year period. I was just wondering whether I need to account for the depreciation in the functional budget or do I not account for the depreciation as the plane will be going back to the leasing company after 5 years?

 

[Werner Reisacher]

The following article will give you valuable input and the answer to your question:

Capital Lease vs Operating Lease - Difference and Comparison | Diffen

What's the difference between Capital Lease and Operating Lease? There are two kinds of accounting methods for leases: operating and capital lease. A vast majority are operating leases. An operating lease is treated like renting -- payments are considered operational expenses and the asset being...

www.diffen.com