Accounting of Operating lease as per AS-19
This query is : Resolved
04 September 2007
If company has noncancellable lease agreement for 2 years. Lease rent for the first year is say 2 Lacs. And lease rent for next 1 year is say 4 Lac. Now as a normal prectice in the first year charge 2 P/L is 2 Lacs and second year is charge to P/L is 4 Lacs. However AS-19 requires lease rent to be charged on SLM over the lease period except it can be shown that benefit received in the later year is higher. So as per AS-19 charge to P/L should be 3 Lacs and second year also it should be 3 Lacs. Is this correct. If charge 2 P/L is as per agreement then how 2 justify
CA Manish Iyer
(Expert)
05 September 2007
Charge Rs.3.00lac to P & L and one lac as unpaid in B/S in the first year and charge Rs.3.00lac next year to P&L and nothing in B/S.
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