{"id":57104,"date":"2016-08-27T00:12:03","date_gmt":"2016-08-26T17:12:03","guid":{"rendered":"https:\/\/bahtera.jp\/leasing\/"},"modified":"2025-03-20T14:12:04","modified_gmt":"2025-03-20T07:12:04","slug":"leasing","status":"publish","type":"post","link":"https:\/\/bahtera.jp\/en\/leasing\/","title":{"rendered":"Capital lease agreements that are depreciated as leased assets"},"content":{"rendered":"

An operating lease is essentially the same as renting an asset from a leasing company, while a capital lease (from the leasing company\u2019s perspective, a finance lease) or sale-and-leaseback involves your own lease asset, incurring depreciation expenses, and is transferred to the main asset after the lease term ends.
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Accounting System in Indonesia<\/p>\r\n\t\t\t\t\t\t\t\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t

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The cloudification of accounting systems is advancing in Indonesia, with the three major local cloud systemsAccurate, Zahir, and Jurnalleading the market. However, in reality, it is said that fewer than 8% of domestic companies have implemented accounting systems. This is why new cloud-based accounting systems continue to be launched in what might seem like an already saturated Indonesian market. It suggests that both domestic and international IT startups see significant potential for cloud accounting systems to expand their market share locally. In Indonesia, automated journal entries due to the widespread use of accounting systems have become commonplace, and over the … <\/p>\n\t\t\t\t\t\t\t\t<\/div>\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t

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Leases Managed by a Fixed Asset Management System<\/h2>\n

Here are some familiar examples of receiving services with someone else\u2019s money:<\/p>\n

\n
\n
    \n
  • A car rental company in Bali lending an Avanza with a driver to numerous tourists<\/li>\n
  • Paying for a book on Amazon with a VISA card, resulting in a deferred payment via VISA credit<\/li>\n
  • A Japanese company in Jakarta signing a lease agreement with a leasing company to acquire a new Innova, paying lease fees over a 3-year contract<\/li>\n
  • Using BCA\u2019s KPR (Kredit Pemilikan Rumah) loan to finance a home purchase, repayable over 15 years<\/li>\n<\/ul>\n<\/div>\n<\/div>\n

    The Avanza rented as a rental car is an asset of the rental company, the book bought on credit is the consumer\u2019s asset, the new Innova under a lease contract is the Japanese company\u2019s asset (though the BPKB = Vehicle Ownership Document is held by the leasing company), and a home purchased with KPR is the consumer\u2019s asset.
    \nA fixed asset management system has the following three functions:<\/p>\n

    \n
    \n
      \n
    1. Fixed Asset Management<\/li>\n
    2. Construction in Progress Management<\/li>\n
    3. Lease Management<\/li>\n<\/ol>\n<\/div>\n<\/div>\n

      When leasing a new Innova as a company vehicle, it\u2019s an operating lease if treated as an expense, but a capital lease (called a finance lease from the leasing company\u2019s perspective) if it\u2019s repayment of a fixed lease asset. The lease management function of the fixed asset system manages capital leases.<\/p>\n

      Reducing Maintenance Burdens by Transferring Assets via Leaseback<\/h2>\n

      Leaseback involves selling a business asset and continuing to use it while paying usage fees to the buyer. The primary goal is cash inflow from the sale, but transferring ownership also shifts the asset\u2019s maintenance obligations.
      \nFor example, the state-owned telecom company Indosat builds telecom towers across Indonesia\u2019s islands. By constructing towers, selling them to a maintenance specialist company, and leasing them back, Indosat outsources maintenance efforts, allowing focus on its core business.<\/p>\n

      Tax Savings and Cash Outflow Suppression with Capital Leases<\/h2>\n

      In an operating lease, leasing an asset from a leasing company by paying lease fees expenses the asset, suppressing large cash outflows, but it\u2019s essentially the same as renting a car.
      \nIn contrast, a capital lease (sale-and-leaseback) involves transferring your own asset to a lease asset without selling it. Unlike short-term payables (A\/P), lease obligations are reduced over a long period. This avoids generating output VAT (PPN-out) from a sale to the leasing company while suppressing significant expenditures from machinery purchases.
      \nSince the factory records it as a lease asset, depreciation occurs. At the end of the lease term, it\u2019s transferred to the company\u2019s fixed assets, but since it\u2019s not a purchase (or sale from the leasing company\u2019s perspective), no input VAT (PPN-in) is incurred.
      \nFor example, consider a machine with a 10-year depreciation period costing Rp.1,000,000 leased over 3 years. The 11% PPN-in of Rp.110,000 at purchase is not included in the lease amount.
      \n(At Lease Contract Signing)<\/p>\n

      \n
      \n
        \n
      • Machine Purchase
        \nPPN-in 11% is not included in the lease contract amount.
        \n(Debit) Plant & Machinery 1,000,000\u3000\u3000\u3000\u3000<\/strong>(Credit) Lease A\/P 1,000,000
        \n(Debit) PPN-in 110,000\u3000\u3000\u3000\u3000\u3000\u3000\u3000\u3000\u3000\u3000\u3000<\/strong>(Credit) A\/P 110,000<\/li>\n
      • Lease Contract Amount
        \nSince it\u2019s not a sale, no 11% PPN-out is incurred.
        \n(Debit) Lease Asset 1,000,000\u3000\u3000\u3000\u3000<\/strong>(Credit) Plant & Machinery 1,000,000<\/li>\n<\/ul>\n<\/div>\n<\/div>\n

        (Monthly Payments)
        \nThe lease contract amount for the machine is Rp.1,000,000, but the purchase amount can be lower than actual, with the difference treated as interest paid with the lease fees.<\/p>\n

        \n
        \n
          \n
        • Lease Payment (1,000,000 \u00f7 3 \u00f7 12)
          \n(Debit) Lease A\/P 27,777\u3000\u3000\u3000\u3000\u3000\u3000\u3000\u3000<\/strong>(Credit) Bank 27,777<\/li>\n
        • Depreciation Expense (1,000,000 \u00f7 10 \u00f7 12)
          \n(Debit) Depreciation 8,333\u3000\u3000\u3000\u3000\u3000\u3000\u3000\u3000<\/strong>(Credit) Accumulated Depreciation 8,333<\/li>\n<\/ul>\n<\/div>\n<\/div>\n

          (After Lease Contract Ends)<\/p>\n

          \n
          \n
            \n
          • Conversion of Lease Asset to Fixed Asset
            \nSince it\u2019s not a purchase, no 11% PPN-in is incurred.
            \n(Debit) Plant & Machinery 1,000,000\u3000\u3000\u3000\u3000\u3000\u3000\u3000\u3000<\/strong>(Credit) Lease Asset 1,000,000<\/li>\n<\/ul>\n<\/div>\n<\/div>\n

            (Monthly Payments)<\/p>\n

            \n
            \n
              \n
            • Depreciation Expense
              \n(Debit) Depreciation 8,333\u3000\u3000\u3000\u3000\u3000\u3000\u3000\u3000<\/strong>(Credit) Accumulated Depreciation 8,333<\/li>\n<\/ul>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

              An operating lease is essentially the same as renting an asset from a leasing company, while a capital lease (from the leasing company\u2019s perspective, a finance lease) or sale-and-leaseback involves your own lease asset, incurring depreciation expenses, and is transferred to the main asset after the lease term ends.<\/p>\n","protected":false},"author":2,"featured_media":81243,"parent":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[683],"tags":[],"class_list":["post-57104","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-indonesia-accounting-tax-rule"],"_links":{"self":[{"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/posts\/57104","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/comments?post=57104"}],"version-history":[{"count":0,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/posts\/57104\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/media\/81243"}],"wp:attachment":[{"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/media?parent=57104"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/categories?post=57104"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/tags?post=57104"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}