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Hire purchase laptop

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(Querist)
27 August 2015 my client purchase laptop on hire purchase agreement. for three year the owner ship with company. charging rental + vat .
after 3 yrs if laptop in running condition will be trf to client.

want detail accounting for the same

capitalize
rent exp
vat treatment
Depriciation ?
if within 3 year any thing happen & not getting ownership ?
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Vivek Hebbar

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Vivek Hebbar (Expert)
28 August 2015 Dear Ketan

You need to check agreement in detail. The rental charged would also include recovery of cost of the laptops. Also at the end of 3 years, the laptops would be transferred at nominal amount. If this is the case, then the transaction will fall under finance lease. You can refer AS-19. The laptops should be capitalized under fixed assets and a liability also created at same amount. Depreciation can be claimed on the assets. For details on calculation please refer AS-19
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