Professional Documents
Culture Documents
ADVERTISEMENTS:
The Lessor will disclose his asset given under lease agreement as an
asset given on lease in his balance sheet. The asset will be classified in
balance sheet as per method adopted for classification of other fixed
assets. All other particulars required as per legal requirements
specified in Schedule VI to Companies Act, 1956 should be disclosed in
financial statements.
(b) Lease equalisation charge, when annual lease charge is more than
statutory depreciation.
Notes:
1. Statutory depreciation allowed should be shown separately in Profit
and Loss Account as shown above in Profit and Loss Account
statement.
ADVERTISEMENTS:
ADVERTISEMENTS:
Illustration 1:
The following particulars are available about a lease agreement.
Fair value of leased asset at the inception of the lease (1-1-2005). – Rs.
1,20,000
ADVERTISEMENTS:
Solution:
(i) Calculation of the implicit rate of interest in the lease:
Generally this rate is known to the lessor. However in this case it is not
given.
Profit and Loss Account and the Balance sheet of the lessor
will disclose as under:
(i) Rental received under lease should be shown under Gross Income
in Profit and Loss Account statement.