Theory and Practice
✔Applies to US GAAP (ASC 842) Finance Leases
✔ Applies to US GAAP (ASC 842) Operating Leases
✘ Does not apply to IFRS (IFRS 9)
? Electively applied to UK GAAP (FRS 102)
Under ASC 842, a refundable deposit is generally recorded at its face amount (undiscounted) as a deposit asset (in “Other Assets”) with a credit to Cash. No discounting or interest income is recorded (US GAAP does not impute interest on refundable deposits as IFRS does). The deposit remains on the balance sheet at $100,000 and is simply removed when refunded, with no Income Statement impact over the lease term.
| Account | Debit | Credit |
|---|---|---|
| Deposit Asset | $100,000 | |
| Cash | $100,000 | |
| Record refundable deposit at full amount (no discounting under US GAAP). | ||
When the deposit is refunded at lease end:
| Account | Debit | Credit |
|---|---|---|
| Cash | $100,000 | |
| Deposit Asset | $100,000 | |
| Receive back the deposit in full; remove the financial asset from the books. | ||
Doing it in Sage Intacct Lease Accounting
This is typically achieved by entering general GL Journal entries.