The Professional judgment in classifying the leasing contracts

Author:University Lecturer, Ph. D. Student Diana MANEA

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Keywords:leasing contracts, leasing accounting, financial leasing, operational leasing

Abstract:
Leasing contracts classification is the key element of the leasing accounting because it determines how accounts the leaser and the leasee the asset which is subject of the leasing contract. Classifying a leasing contract in a way or another has important consequences on the financial statements (especially of the leasee) and on the economic- financial indicators calculate based on these indicators.\r\nThe leasing contracts are classified as financial leasing and operational leasing.\r\nIf it has been decided that a leasing is a financial one, the asset will be registered in the leasee balance sheet in correspondence with a long term debt and the leaser will register the contract as an investment operation. If the contract has been classified as an operational leasing, the leaser will maintain the assets in its balance sheet while the leasee financial statements will reflect only an expense with the rent (in the profit and loss account).\r\n

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