LETTER OF NATIONAL BANK OF THE REPUBLIC OF KAZAKHSTAN  

of March 28, 2002 No. 24211/201

Present the National Bank of the Republic of Kazakhstan submits the recommendations about accounting of financial leasing developed according to the Law of the Republic of Kazakhstan "About financial leasing" (dalee-Zakon about leasing).

According to articles 30 and 31 of the Law of the Republic of Kazakhstan "About banks and banking activity in the Republic of Kazakhstan", banks have the right to perform leasing activities. The procedure for reflection in financial accounting of the transactions of bank (lessor) connected with issue in financial leasing of the acquired leasing subject shall be provided in internal documents of bank and find the reflection in its accounting policy.

The purpose of these recommendations is assistance to banks in creation of the internal document determining procedure for reflection in financial accounting, the transactions made by it connected with acquisition and transfer to financial leasing of property which list is determined by article 4 of the Law on leasing.

In these Recommendations the concepts determined by article 2 of the Law on leasing are used.

1. Procedure for reflection in financial accounting of transactions in bank lessor

1. After the conclusion of the agreement of leasing and its state registration according to the procedure, determined by legal acts of the Republic of Kazakhstan, the leasing subject approved with the leasing recipient and transferred to the leasing recipient to temporary ownership and use for the entrepreneurial purposes for certain payment is reflected in accounting as follows:

1.1. Acquisition at the seller of subject of the leasing approved with the leasing recipient for transfer to the last on terms of the contract of leasing:

a) receipt of fixed assets

Dt 1656 "The fixed assets intended for leasing"

Kt 2856 "Creditors on the capital investments"

b) payment for the received fixed assets

Dt 2856 "Creditors on the capital investments"

Kt 1050 "Correspondent accounts of bank"

1.2. Transfer of subject of leasing to the leasing recipient according to terms of the contract of leasing in temporary ownership and use for the entrepreneurial purposes:

Dt 1305 "Financial leasing to other banks"

1420 "Financial leasing to clients"

Kt 1656 "The fixed assets intended for leasing"

2. Monthly no later than the last working day of month the lessor performs charge of remuneration on financial leasing. At the same time, the following accounting entry is performed:

Dt 1730-1 "Imputed incomes on loans and the financial leasing provided to other banks"

1740 "Imputed incomes on the loans and financial leasing provided to clients"

Kt 4305 "The income connected with receipt of remuneration on the financial leasing provided to other banks"

4420 "The income connected with receipt of remuneration on the financial leasing provided to clients"

1-on accounts No. No. 1730 and 1740 it is supposed to change their appointment in the Chart of accounts of financial accounting in banks of the second level of the Republic of Kazakhstan approved by the resolution of Board of National Bank of the Republic of Kazakhstan of November 15, 2000 No. 419

3. If the leasing recipient made at the expense of own funds and from written consent of the lessor of improvement, not separable without harm for leasing subject, the lessor recognizes the obligations to the leasing recipient on compensation to it the cost of these improvements in case of approach of the termination of the duration of the agreement of leasing. At the same time, the following accounting entry is performed:

Dt 5922 "Other expenses from non-bank activities"

Kt 2860 "Other creditors"

4. In case of receipt of leasing payments in the terms provided by the agreement of leasing, the lessor performs the following accounting entries:

a) on the amount of the added remuneration on financial leasing

Dt 1050 "Correspondent accounts of bank"

Kt 1730 "Imputed incomes on loans and the financial leasing provided to other banks"

1740 "Imputed incomes on the loans and financial leasing provided to clients"

b) on the amount of primary obligation on financial leasing including purchase costs of subject of leasing and any other expenses connected with acquisition, delivery of subject of leasing and its reduction in the working condition for proper use according to the agreement of leasing at the price of the moment of the conclusion of the agreement of leasing

Dt 1050 "Correspondent accounts of bank"

Kt 1305 "Financial leasing to other banks of" 1420 "Financial leasing to clients"

5. In case of delay the leasing recipient of payments on remuneration, and also the amounts of principal debt on financial leasing, performs the following accounting entries:

a) on the amount of the added remuneration

Dt 17312 "Overdue remuneration on the loans and financial leasing provided to other banks"

1741 "Overdue remuneration on the loans and financial leasing provided to clients"

Kt 1730 "Imputed incomes on the loans and financial leasing provided to other banks"

1740 "Imputed incomes on the loans and financial leasing provided to clients"

2-on accounts No. No. 1731 and 1741 it is supposed to change their appointment in the Chart of accounts of financial accounting in banks of the second level of the Republic of Kazakhstan approved by the resolution of Board of National Bank of the Republic of Kazakhstan of November 15, 2000 No. 419

b) on the amount of primary obligation on financial leasing

Dt 13093 "Overdue debt of other banks on financial leasing"

1421 "Overdue debt of clients on financial leasing"

Kt 1305 "Financial leasing to other banks"

1420 "Financial leasing to clients"

3 accounts No. No. 1309 and 1421 are supposed to be opened in the Chart of accounts of financial accounting in banks of the second level of the Republic of Kazakhstan approved by the resolution of Board of National Bank of the Republic of Kazakhstan of November 15, 2000 No. 419

c) on the amount of the created provisions on primary obligation on financial leasing in the amount of, established by regulatory legal acts of National Bank

- on general provisions

Dt 5456 of "Assignment for general reserves (provisions) for covering of losses from credit activities of bank"

Kt 1465 "General reserves (provisions) on covering of losses from credit activities of bank"

- on special provisions (on the debt rest)

Dt 54524 of "Assignment for special reserves (provisions) on the loans and financial leasing provided to other banks"

5455 of "Assignment for special reserves (provisions) on the loans and financial leasing provided to clients"

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