§ 21. The Great Reform of 1861 and redemption payments.

Sometimes the lessee wishes to purchase the leased asset. The Law “On Lease” No. 164 spells out the basic rules for financial leasing, but does not stipulate the procedure for purchasing an object. Therefore, the purchase is carried out on the basis of civil law. It involves mandatory accounting and tax accounting.

Question: The parties entered into a leasing agreement. At the end of its validity period, the lessee purchased the leased object. Does the lessee have the right to make claims to the seller regarding the quality of the property after termination of the contract? View answer

General provisions

A leasing agreement is a form of a rental agreement, and therefore paragraph 1 of Chapter 34 of the Civil Code of the Russian Federation will apply to the agreement. Article 624 of the Civil Code of the Russian Federation states that leased objects can be purchased by the lessee. The purchase is made at the full purchase price. The lease agreement may contain provisions regarding mutual settlements and the amount of the redemption price. If such clauses exist, the purchase is made on their basis, that is, at the cost specified in the contract. If there is no information in the agreement, an additional transaction is drawn up. An agreement is concluded which stipulates these points:

  • Formation date.
  • Details of both parties.
  • Characteristics of the leased object.
  • The volume of residual value (redemption value minus payments already made).
  • Rights and obligations of participants.
  • Payment method.

Question: The lessee organization (LLC-1) entered into a leasing agreement for a period of two years with the right to purchase the leased asset at the end of the agreement, subject to payment of the entire amount of the agreement. The leased asset (fixed asset item) is recorded on the lessor's balance sheet. This object is used by the lessee in the main production. After six months, LLC-1, with the consent of the lessor, transfers to the new lessee (LLC-2) all its rights and obligations under the leasing agreement. How to reflect these transactions in the accounting and tax accounting of LLC-1? View answer

The agreement must contain the signatures of both parties. It is important to write down all points in detail. This will avoid possible disputes.

IMPORTANT! The leased object can be purchased both after the completion of the leasing agreement and during its validity.

Leasing agreement: purchase of property

Capital investments necessary for the activities of any organization require free funds, which are most often not enough. One of the solutions is a financial lease (leasing) agreement, upon conclusion of which organizations receive ownership and use of the real estate they need, cars, equipment, and office equipment.

The Tax Code of the Russian Federation does not contain a special mechanism for taxing leasing operations when accounting for leasing payments as expenses to reduce income tax. However, the structure and procedure for their formation have features related to the possibility of transferring ownership of leased property from the lessor to the lessee. Despite the fact that the provision on the transfer of ownership of the leased property from the lessor to the lessee is not a mandatory condition of the leasing agreement, it is often included in it. Thus, the agreement concluded between the parties contains elements of both a lease and a purchase and sale agreement. The lessee pays his counterparty not only the lease payment, but also the redemption value of the leased property.

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