Machinery purchase for lease purpose
This query is : Resolved
19 October 2012
Dear Experts
We purchased a machine and lease out for one year or may be more to our customer on rent.
But I am confusing to decide whether it is our Fixed Assets or Inventory Item. Because when lease period overed we will try to sell the items to some other customer.
Could you clarify me on the matter.
Thanks
Bhoop Singh
We purchased a machine and lease out for one year or may be more to our customer on rent.
But I am confusing to decide whether it is our Fixed Assets or Inventory Item. Because when lease period overed we will try to sell the items to some other customer.
Could you clarify me on the matter.
Thanks
Bhoop Singh
20 October 2012
As you have given this machine on rent / lease for about one year, the asset purchased should continue to be treated as a Fixed Asset and depreciated over its useful life. The rent received from the machine leasing should be treated as part of Revenue.
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