Ask ExpertsCategory: Lease and Finance MgtHow can I prevent OLFM to create an asset ?
mongy asked 7 years ago

have OLFM Implementation and my client lease A car.
The company Lease Finance, whereby the customer approaches the company to request leasing a vehicle of his/her choice. Accordingly, the company buys the vehicle and lease it to the customer for a specified period of time and against an agreed monthly rental payment. At the end of the leasing tenor, the customer has the option to either return the vehicle or pay the pre-agreed Ownership payment (Balloon Payment ) and own the vehicle.
The main point my client didn’t considered those cars as an asset and didn’t depreciate it. How can I make this in OLFM. what is the best practice ? 
I really appreciate your help and support.

1 Answers
Mukul Mittal Staff answered 7 years ago

When the contract is created as a finance lease, the asset is not tracked as an asset for book depreciation. The asset cost is written down to zero.
Hope this helps.

mongy replied 7 years ago

Many thanks

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