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Depreciation on assets not owned by company

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Querist : Anonymous

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Querist : Anonymous (Querist)
13 August 2010 Can a co claim depreciation on FA on which it does not enjoy ownership rights??Co is claiming depn on expenses incurred after takeover of asset from govt on a lease basis??
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CA SMR

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14 August 2010 Yes,refer to the clause 18 of AS 19 in case of finance lease.
18. A finance lease gives rise to a depreciation expense for the asset as well as a finance expense for each accounting period. The depreciation policy for a leased asset should be consistent with that for depreciable assets which are owned, and the depreciation recognised should be calculated on the basis set out in Accounting Standard (AS) 6, Depreciation Accounting. If there is no reasonable certainty that the lessee will obtain ownership by the end of the lease term, the asset should be fully depreciated over the lease term or its useful life, whichever is shorter.
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