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 ?
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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