Long-term Lease? Are you Accounting for it Properly? Part II

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Let’s expand on last week’s blog post that outlined § 467 leases and review the details involved in applying the rules to your business.

Process
Why should I care if I use Cash Basis Accounting? First and foremost, it is important to outline that all leases subject to § 467 will be computed on the accrual method of accounting. Therefore, the average monthly payments must be calculated regardless of your accounting method.

How to Calculate

  1. Calculate all monthly payments from inception to the lease’s final period. *If your are going to exercise a lease extension option, include the lease extension and the additional …read more

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