Rent Equalization reserve

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CA. Pramod Kumar

CA. Pramod Kumar (Querist)
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18 June 2010 Plz tell me under which rule/GN/standard/compliance rent equalisation reserve is neccesary to create.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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18 June 2010 Where have u read it?

CA. Pramod Kumar

CA. Pramod Kumar (Querist)
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18 June 2010 i have seen this reserve in a balance sheet and it is used to calculate deffered tax also

Aditya Maheshwari

Aditya Maheshwari (Expert)
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18 June 2010 I think this is as per AS - 19 para 40

Lease income from operating leases should be recognized in the statement of profit and loss on a straight line basis over the lease term, unless another systematic basis is more representative of the time pattern in which benefit derived from the use of the leased asset is diminished.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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18 June 2010 For eg:

If lease period is for 3 years and rent as per agreement is Rs. 20,000 per month for 1 st year, Rs. 25,000 per month for 2nd year and Rs. 30,000 per month for 3rd year then rent expenses should be booked Rs. 25,000 per month for all the three years.

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