Study On The Accounting Treatment Problem Of Financial Leasing For Tangible Personal Property

In recent years, the leasing business develops rapidly in China, playing a more and moreimportant role in economic development, especially the financing lease after-sales leasebackbusiness which occupies about80%market has been widely used and promoted. As thecarrier of accounting information, the Lease Accounting is attached great importance by boththe two parties of lease and the stakeholders, however, of the current "Accounting standardsfor Enterprises No.21-Leases" on the provisions of the lease rental--there are some problemsin practice that yet have not attracted enough attention, such as, the defects in classification ofthe lease lead to the Off-Balance-Sheet Financing occurring from time to time; the accountingtreatment of initial direct costs causes the criterion and rules conflicting; the unguaranteedresidual impairment results in the unrealized financing income in balance on the expiry oftenancy; and the confirmation of repossessed assets nature is not accurate enough. At the sametime, with the Ministry of Finance and State Administration of Taxation jointly issued inNovember2011"the levy of Value-added tax replacing the business tax pilot program”, thebusiness tax replaced by Value-added tax begins in China (Hereinafter referred to as “businesstax to VAT”), then, since Jan.1,2012it is carried out firstly in Shanghai transportationindustry and part of modern service industry, in which, the “business tax to VAT” taxableservices include tangible personal property leasing services, the financing lease industrybelongs to this service. This reform is gradually pushed to the whole country. After “Businesstax to VAT”, in pilot district, lessors of general taxpayer are faced with many problems onhow to deal with VAT, such as when to confirm the VAT output tax; the lease financingreceivables confirmation problems; and the unrealized financing income calculation baseindex problems. At present, there is not much research on these problems, and experts andscholars have not yet reached an unanimous view.This paper mainly uses the standard research methods, studies deeply on the problems ofFinancing lease after-sales leaseback business accounting treatment in the leasing criteria andproblems of the financing lease after-sales leaseback business VAT accounting treatment in pilot district after the “business tax to VAT”, and put forward the suggestions to solve theseproblems. The paper firstly analyzes and discusses the related concepts of VAT and “Businesstax to VAT”, therefore laying a theoretical foundation for the analysis of problems existing infinancing lease accounting treatment and providing relevant suggestions in the followingchapters. Secondly, it proposes the problems existing in financing lease after-sales leasebackbusiness accounting treatment in the leasing criterion, and problems of the financing leaseafter-sales leaseback business VAT accounting treatment in pilot district after the “businesstax to VAT”. Thirdly, based on problem analysis in Chapter3, this paper puts forward thesuggestions for solving these problems. Last but not the least, according to the analysis andsuggestions in this paper, it systematically through a case, presents the accounting treatmentof financing lease after-sales leaseback business of lessors in the pilot district afterthe“business tax to VAT”.