Example: If I bought a machine for £100,000 where I am paying lease
at 12% for 5 years. At the end of the payment I will own the machine. I
will be paying a fixed monthly payment of £2,224.44 every month for 5
years. How would this be setup on Odoo so that my balance sheet and
income statement is accurately recorded?
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After calculating the PV of the future payments, create a Manual Journal Entry to record the corresponding Asset and Liability at the same time, with a DEBIT to a Fixed Asset account and a CREDIT to your lease liability account.
From the DEBIT Journal Item, you can then CREATE ASSET, choose the depreciation expense account, check the depreciation schedule, and set up the automated depreciation entries to reduce the value of the Asset by periodically expensing it.
When your Lease payment is due, create a Vendor Bill with a line for the amount which will debit the liability account for the same value as each payment, each month.
Calculating the
PV of the future lease payments is something you would still do in a
spreadsheet (outside Odoo) and you may also need additional manual
Journal Entries created if you want to record the principal and interest portions of the lease payment.
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