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Here is my ansewer:

huskywang(husky)

First - ---- initial booking for capital lease (if you have decided this is capital lease – 3 or 4 test maybe?)

Dr. Gross assets (Fair value of asset) – do not include HST
Dr. Interest expenses
Cr. Long term obligation - do not include HST

Second ----- monthly payments

Dr. long term obligation
Dr. GST paid on purchase (ITC, you can claim back when you file monthly GST return)
Cr. Cash

Third ---- Monthly amortization schedule

Dr. Amortization expenses
Cr. Accumulated amortization – asset

(#63032@41)
Last Updated: 2012-3-21

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请教一下关于CAPITAL LEASE 中的HST怎么处理? 如果刚开始就直接减去,OBLIGATION 就减少了,后面怎么折旧也折不平. -susan_wu(皓皓妈升级版); 2012-3-20 (#62999@41)

HST 不参与固定资产折旧。它是input tax credit,可以从CRA claim back 回来. -huskywang(husky); 2012-3-20 (#63004@41)

银行算每月月付是包括HST的总额，如果把HST单独拿出来，每月的月付和obligation就很难折平了。我需要用capital lease来处理。 -susan_wu(皓皓妈升级版); 2012-3-20 (#63019@41)
我的问题可能说不清楚，我做capital lease的时候，每个lease term的obligation of lease的折旧，如果我在最初就把HST拿出来为ITC，那我的obligation of lease 的amortization就不对了，所以我想问一下在HST的情况下，如果算OBLIGATION的amortization schedule，谢谢 -susan_wu(皓皓妈升级版); 2012-3-20 (#63023@41)

向银行要amortization schedule啦。如果是sales and leaseback。当初Sales的时候，税要全部remit，净值capitalize，资产depreciation照旧。资产也可以重新分类一下，分成xx under capital lease。每月的lease payment，Debit HST receivable and Lease obligation。 -victor714(Victor); 2012-3-20 {196} (#63027@41)
如果改成off-balance sheet（当然这个不太符合GAAP），当成operating lease，就把资产抹掉，不用再depreciate，lease payment net of tax进lease expense.

如果debt太多了，可以暂时这样做，但auditor会调。

非常感谢~ 加了HST 我就有点晕了,:) -susan_wu(皓皓妈升级版); 2012-3-21 (#63031@41)

Here is my ansewer: -huskywang(husky); 2012-3-21 {525} (#63032@41)
First - ---- initial booking for capital lease (if you have decided this is capital lease – 3 or 4 test maybe?)

Dr. Gross assets (Fair value of asset) – do not include HST
Dr. Interest expenses
Cr. Long term obligation - do not include HST

Second ----- monthly payments

Dr. long term obligation
Dr. GST paid on purchase (ITC, you can claim back when you file monthly GST return)
Cr. Cash

Third ---- Monthly amortization schedule

Dr. Amortization expenses
Cr. Accumulated amortization – asset

1st JE is not correct. -readingbook(chinacanada); 2012-3-21 (#63033@41)

thanks for pointing out. can you advise of a correct entry so we can discuss? -huskywang(husky); 2012-3-21 (#63035@41)

read lease agreement to see how they handled taxes. -readingbook(chinacanada); 2012-3-21 {605} (#63034@41)
if the lease includes HST paid on the total $ at the start of the lease, you need to code HST in the 1st intial booking (see below).Otherwise, HST should be accounted for when you make periodic lease pmts.

a) Dr. leased assets ***
Cr. leased liabilities *** (exclude any imputed interest ) it is 100% L/T liability in B/S.

b) Dr. interst exp. *** ( set up your own amortization schedule)
Dr. leased liabilty ***(principle)
Dr. HST ITC ***( note: not record this if HST was accounted at the onset of the lease)
Cr. cash ***

c) Dr. depreciation exp. ***
Cr. AA ***

How to calculate HST-ITC for each payment period? Use effective annual rate? -susan_wu(皓皓妈升级版); 2012-3-21 (#63038@41)

HST is nothing to do with the annual rate. HST ITC should be specified on the lease agreement. Yes, the peridic interest pmt is calculated using effective interest rate. -readingbook(chinacanada); 2012-3-21 (#63039@41)

yes. Readingbook is correct. -huskywang(husky); 2012-3-21 (#63042@41)

Reading book please help! Am I right? -janeyeee(jane); 2012-5-11 {534} (#64964@41)
leasing amount include HST amount, eg.car cost 10k, total leasing amount is $11.3K

a) Dr. leased assets ***
Dr. ITC input
Cr. leased liabilities *** (exclude any imputed interest ) it is 100% L/T liability in B/S.
Cr. Loan for HST

b) Dr. interst exp. *** ( set up your own amortization schedule)
Dr. leased liabilty ***(principle)
Dr.interest Exp.
Dr.Loan for HST principle
Dr. HST ITC ***( note: not record this if HST was accounted at the onset of the lease)
Cr. cash ***

c) Dr. depreciation exp. ***
Cr. AA ***

For a), you dont need to set up account- loan for HST,see below: Dr. leased assets*** Dr. ITC *** Cr. Leased liabilities b) Dr. interest exp.*** Dr. leased liability*** Cr. cash c) correct -readingbook(chinacanada); 2012-5-14 (#64996@41)

Thanks! -janeyeee(jane); 2012-5-14 (#65005@41)

hi Reading book, -huskywang(husky); 2012-3-21 {598} (#63037@41)
Hi Reading Book,

Yes. Your logical is correct if a lump sum HST/GST paid at the start of the lease. If so, your first and second entry might not be correct either as HST (input tax credit) can be claimed whenever you paid. So HST receivable (total amount you paid on this lease) should be recorded in the first entry. But you cannot claim any HST later.

But Susan said that they only pay HST with the monthly payment not a lump sum at the start. - (----this is normal business practice), so HST should be recorded each time when you paid --- did I misunderstood Susan’s question?

Thanks,

You are right -susan_wu(皓皓妈升级版); 2012-3-21 {250} (#63040@41)
, my problem is the total HST including the principle in our vehicle lease and amortization with interest expense together. I can't figure out HST for each period. If I need to assume HST equal payment/1.13*0.13 and others treat as interest expense?

the leas agreement should specify the HST they charged. if not, your logical is correct. after dedcuting HST, the other goes to interest expense. -huskywang(husky); 2012-3-21 {257} (#63043@41)
the leas agreement should specify the HST they charged.
if not, your logical is correct. after dedcuting HST, the other goes to interest expense.

the interest expense should be recorded at the begining of the lease according to accraul basis accounting.

We do not take HST on period payment into lease covenant. Firms do not have obligation to HST on lease payment as this HST will be taken into ITC in the same reporting period. -linsh(linsh); 2012-3-21 (#63056@41)

@Las Vegas

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