Finance Leasing Manual - FLM23.07

Intermediate lessors: accountancy treatment

For accounting purposes an intermediate lessor will

• recognise the income element of the rentals received in its accounts in the normal way (applying SSAP21)

• spread the interest element of the rentals paid over the primary period in the same way (applying the principle that income and expenditure should be matched)

• have no entries for 'depreciation' as it does not own the asset - the capital element of the rentals received should match the capital element of the rentals paid, leaving no net effect in the accounts.