ACCOUNTING FOR

LEASE
TRANSACTION
Josua Pranata (008201600059)
Kevin Kenn Tangkas (008201600013)
Nathania Neysa (008201500022)
Silvia Sely Grace Gea (008201600062)
Ding Zisheng (008201600082)
■ Lease is any company financing activity in the form of providing capital goods to be
used by a company for a period of time, accompanied by an option for the company
to buy the capital goods in question or extend the lease term based on the value the
remaining agreed upon.
■ a leasing company is a business entity that carries out financing activities in the
form of providing capital goods, both financial leases and operating leases to be
used by tenants for a certain period of time based on regular payments.
Finance Lease
• is a leasing activity where the tenant at the end of the contract period has the option
right to buy the object of the lease based on the agreed upon residual value.

Operating Lease
• is a leasing activity where the tenant does not have the option right to buy the object of
the lease

Lessee
• is a company or individual that uses capital goods with financing from the leasing company
PSAK 30 (revised 2007) is applied in accounting for all types of leases,
except:

■ Leases in the framework of exploration or mining of mineral, oil,

natural gas and other non-renewable resources; and
■ License agreements for things such as films, video recordings, stage
works, manuscripts (written works), patents and copyrights.
 Classification of Leases
• A lease that transfers substantially all the
Finance risks and benefits associated with
ownership of an asset. Property rights can
Lease eventually be transferred, can also not be
transferred.

• a way of not substantially transferring all

Operating risks and benefits associated with asset
ownership.
Lease
 The standpoint of the Lessor:
■ Sales-type leases. Leases that give rise to manufacturer's or dealer's
profit (or loss) to the lessor.
■ Direct financing leases. Leases other than leveraged leases that do not give
rise to manufacturer's or dealer's profit (or loss) to the lessor but that
meet one or more of the criteria in paragraph 7 and both of the criteria in
paragraph 8.
■ Leveraged leases. Leases that meet the criteria of paragraph 42.

The standpoint of the lessee:

 Capital leases. Leases that meet one or more of the criteria in paragraph 7.
 Operating leases. All other leases.
rental accounting practices

■ 1 payment in advance
■ 2 payment in arrears
Financial lease

■ 1 for the lessor

■ 2 for the lessee
■ 3 for lease payments
The lease payment calculation

1. Payment in advance
2. Payment in arrears
The Income Tax Treatment of Lease

In the Ministry of Financial Decision number 1169/KMK.01/1991 define lease criteria,

financial and operating lease. The criteria are:
1) Financial lease, if
1) The total amount of lease payment for the first lease period plus the residual
value of the capital goods, has to be able to cover the acquisition cost and
lessor’s profit
2) The minimum lease period
1) 2 years for capital goods type I
2) 3 years for capital goods type II and III
3) 7 years for type of building
3) The contract contains provision about option for lessee
CONT.

2) Operating Lease, if
1) The total amount of lease payment in the first period cannot cover the
acquisition cost of the capital goods leased plus the gain calculated by the
lessor
2) The contract does not contain the provision about the option right for lessee
 The stipulations of the taxation problem which is
related to the income tax for lessor and lessee are as
■
follow:
Financial lease
– For lessor
■ The taxable income is part of the lease payment which are total of the payment deducted by
the principles. In the matter of sewa sindikasi (some companies in the same time make
transaction with one lessee), the compensation for each member is calculated proportionally
based on the contract between the member of the lease
■ Lessor cannot make depreciation for the capital goods leased
■ Lessor cannot make allowance of doubtful account as high as 2,5% and the average of
beginning balance and ending balance of lease receivable which is the total amount of lease
payment covering the principle and interest. The afda made can be deducted from the gross
income in the related tax period
■ The amount of income tax 25 installment for every month is the amount of income tax as the
result of the income tax law application towards the PKP based on the last quarterly report
combined into yearly report divided by 12 months. If the lessor is also performing operating
lease, then the quarterly report mentioned is the combined quarterly report
CONT.

■ For lessee
– Lessee can not make depreciation of the capital goods leased, until lessee use
the option to buy the goods, the depreciation will be made from the taxation
period the option used. Specially for the capital goods in the form of land is not
allowed to make depreciation
– The base of the depreciation used after lessee uses the option right to buy the
capital goods is the residual value of the goods
– The payment paid or owed, except expenses of the land, is the deductible cost
from the gross income as long as the transaction can be classified as financial
lease
CONT.

■ For the lease payment paid or owed by lessee, deduction of income tax 23 cannot
be made. The income tax treatment for point a, b, and c is valid for the lease which
contract signed after the application of the Ministry of Financial Decision mentioned
Rent without option rights
1. For the lessor
a) all lease payments received or obtained are objects of PPh
b) Imposition of depreciation costs for leased capital goods begins in the tax year of
the capital goods concerned. Especially for capital goods in the form of land, it is
not permitted to be leased
c) The lessor is not permitted to form a reserve for the elimination of doubtful
accounts

2. For the lessee

a) Lessee may not depreciate capital goods leased
b) Payment of rent paid or payable is a fee that can be deducted from gross income
Rent without option rights
3. For lease payments paid or payable by the lessee must be deducted from Article 23 of
Income Tax
The basis for calculating the income tax article 23 is gross rental receipts, with the
following conditions
a) A leasing company that is solely engaged in rental business without option rights, the
calculation of Income Tax article 25 as referred to in article 1169 of the Minister of
Finance Decree No. 19 / KMK.04 / 1991 does not apply
b) The director general of tax makes corrections if the lease period is shorter than the
minimum period. In the case of a financial lease agreement stating a shorter period of
time or the implementation ends within a shorter period of time than the minimum
period indicated, the tax treatment is equated with the operating lease
c) For capital goods leased, lessors and lessees are obliged to make separate records and
assets that are not leased
d) the lessee is prohibited from renting back capital goods that are leased to other parties
Submission of services in the rental
category
Required journal entries need to pay attention to whether the lease has option rights or not.

Without option rights

PT Asuarent has been confirmed as PKP renting heavy equipment for Rp. 70,000,000 a
month with the SGU pattern without option rights to PT Pembangunan which has also been
confirmed as PKP. The rental calculation is carried out as follows

Rental price per month Rp 70.000.000

VAT (10% X Rp 70.000.0000) Rp 7.000.000
Rp 77.000.000
Article 23 of Income Tax for rent
(2% X Rp 70.000.000) Rp 1.400.000
Total payment Rp 75.600.000
Submission of services in the
rental category
Journal Verse made for the transaction
A. The lessor

Date Account Debit (Rp) Credit(Rp)

Cash and bank 75.600.000
Article 23 of Income Tax is prepaid 1.400.000
Output VAT 7.000.000
Rental income 70.000.000
Submission of services in the
rental category
B. The Lease

Date Account Debit (Rp) Credit(Rp)

Rental expenses 70.000.000
VAT input 7.000.000
Article 23 income tax payable 1.400.000
Cash and bank 75.600.000