Leases : calculate capital and interest repayments - Printable Version +- Accountancy Forum (https://www.accountancy.com.pk/forum) +-- Forum: The Profession (https://www.accountancy.com.pk/forum/forumdisplay.php?fid=4) +--- Forum: Accounting and Audit (https://www.accountancy.com.pk/forum/forumdisplay.php?fid=7) +--- Thread: Leases : calculate capital and interest repayments (/showthread.php?tid=4236)

Leases : calculate capital and interest repayments - finance - 02-21-2007 Hi - any help would be greatly appreciated. We're leasing equipment at present from a supplier. We have decided to finance the lease through a finance company. We pay our finance company a fixed amount each month for the next 33 months. My problem is that I have to calculate what proportion of the fixed amount is capital and what proportion of the fixed amount is interest for the next 33 months - and post the amounts to the general ledger. I have reviewed the lease agreement from the finance company - there is no interest rate quoted on the agreement. Is there a method to do this? Any help would be greatly appreciated. Thanks - Junaid - 02-21-2007 Hi, Provide u'r e-mail address with following information --Installment amount --Total outstandind principal at the begining I'll send u the related amortization schedule in Xls format. - Abdur.Rehman - 02-26-2007 you can use your own incremental borrowing rate. That is if u take the same lease from a bank, or any other financial institution, what rate of interest you will have to pay... As per the accounting standards you can use that rate... - finance - 02-28-2007 Thanks for the assistance. I worked the repayment and capital amounts out by subtracting the total payments made to the finance company from the total loan amount of the loan agreement. Using the sum of digits method - I allocated the each repayment out throughout the duration of the lease and seperated it between capital and loan interest repayment. Thanks again.