Accounting for capital leases

Question

While the lease payments are capitalised on balance sheet under capital lease, how is the depreciation taken into account. Does deprecition on asset considered on new capitalised value of asset or the old tax value of asset.

Answer 1

Once you've capitalized the correct amount into assets, you should depreciate them in accordance with the company's depreciation policy. The accounting depreciation can be different from the tax dept's depreciation.