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Equipment is leased for 60 months; cost of $35000 with option to buy out for $1.00 - Capital lease (I think). How do I report leasing payment inT2? and how to calculate the depreciation for accounting and CCA for tax purposes.
Thanks very much for your help.
Image.
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Leasing equipment
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#2
Joe 
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Posted 05 April 2007 - 07:06 AM
Image, on Apr 4 2007, 11:22 PM, said:
Equipment is leased for 60 months; cost of $35000 with option to buy out for $1.00 - Capital lease (I think). How do I report leasing payment inT2? and how to calculate the depreciation for accounting and CCA for tax purposes.
Thanks very much for your help.
Image.
Thanks very much for your help.
Image.
For your bookkeeping purposes, you are correct.
However, since you are likely to be reporting it very differently for Accounting and for Tax purposes, you should get your Professional Year-end accountant to review the Lease documentation and any other agreements your corporation has with the Lessor before he/she prepares the T2.
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#3
JohnV
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Posted 05 April 2007 - 03:23 PM
II (Insufficient information) provided Image, so no answer is available...except, yup, from the scanty details, the $1 option does indicate strongly this is a capital lease....
So yes, either consult a local expert, or delve into the books so that you can frame your question better...ie learn more about capital cost, implicit interest rates, CCA classes and rates, and how generally to account for leases for both accounting and tax purposes....once you undrstand these things, you'll be able to provide the kind of information we need to answer your querry....
So yes, either consult a local expert, or delve into the books so that you can frame your question better...ie learn more about capital cost, implicit interest rates, CCA classes and rates, and how generally to account for leases for both accounting and tax purposes....once you undrstand these things, you'll be able to provide the kind of information we need to answer your querry....
#5
BrentM
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Posted 16 April 2007 - 06:20 AM
dunner, on Apr 9 2007, 08:17 PM, said:
The Supreme Court has essentially said that a lease is a lease (follow the documentation).
Generally reported as/on a lease agreement means lease payments for tax, different of course for accounting/bookkeeping. Been awhile since I reviewed the ITA on this but likely shouldnt be to hard to look that up (I'm working from home and no ITA or CCH material).
Capitalize the $1.00 buyout and depreciate for type of asset!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! :blink:
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