Equipment Leasing
OverheadsThis Overheads code records the cost of equipment leasing incurred in running the business. As an expense account, it normally carries a debit balance: debit entries increase the balance (recording new costs) and credit entries decrease it (for example, correcting an error or a refund received).
Real-world examples
Manufacturing
A manufacturer leases a forklift truck for the warehouse under an operating lease, paid quarterly. Because the lease is simply for the right to use the equipment rather than eventual ownership, each rental is expensed as incurred rather than capitalised as a fixed asset. A quarterly invoice of £1,860 (£1,550 net of VAT) is a debit of £1,550 to 7702 (Equipment Leasing), a debit of £310 to 2201 (Purchase Tax Control Account), and a credit of £1,860 to 2100 (Creditors Control Account).
Hospitality and catering
A restaurant or catering business leases commercial kitchen equipment — combi ovens, dishwashers — rather than buying outright, because equipment under daily heavy use wears out fast. Leases in this sector often bundle routine servicing into the rental itself, so nothing separate needs posting to 7800 (Repairs and Renewals) for that equipment. A monthly invoice of £372 (£310 net of VAT) is a debit of £310 to 7702, a debit of £62 to 2201, and a credit of £372 to 2100.
Commonly confused with
Because code 7701 (Office Machine Maintenance) sits right next to this one in Overheads, it's a common mis-posting target. Code 7702 is specifically for equipment leasing, while 7701 covers office machine maintenance — similar in nature, but keeping them separate is what makes the overheads section of your management accounts meaningful rather than a single lumped total.
What a mis-posting here costs you
An error posting to Equipment Leasing won't change total overhead spend, but it will distort the overheads breakdown that's usually reviewed line by line each month to spot cost creep.