Rent from crane
This query is : Resolved
VISWANADH.R
(Querist)
12 June 2009
A firm uses crane for its manufacturing unit.. it also let it on rent at times. Would this income be part of manufacturing A/c or P&L a/c..
CA Archana
(Expert)
12 June 2009
Its should go to the manufacturing account as its not their regulare source of income and they r not owning the cranes also.
VISWANADH.R
(Querist)
15 June 2009
What if it is owned by the firm.....
21 July 2025
Great question about treatment of crane rental income!
Situation 1: Firm uses crane for manufacturing but does not own it, and occasionally lets it out on rent.
Since crane is not owned by the firm, and letting it out is incidental to manufacturing, the income from renting the crane is generally credited to the Manufacturing Account (reducing manufacturing cost), because it's not a regular business activity or trading operation.
Situation 2: If the crane is owned by the firm:
Now the firm owns the crane, so the rental income is a regular income from an owned asset.
The crane rent received should be credited to the Profit & Loss Account as other income (non-operating income), because the firm is earning income from letting out an asset.
It should not be credited to Manufacturing Account because it’s income unrelated to the manufacturing activity itself.
The costs related to the crane (depreciation, repairs, etc.) would be charged to manufacturing or other relevant accounts as usual.
Situation 1: Firm uses crane for manufacturing but does not own it, and occasionally lets it out on rent.
Since crane is not owned by the firm, and letting it out is incidental to manufacturing, the income from renting the crane is generally credited to the Manufacturing Account (reducing manufacturing cost), because it's not a regular business activity or trading operation.
Situation 2: If the crane is owned by the firm:
Now the firm owns the crane, so the rental income is a regular income from an owned asset.
The crane rent received should be credited to the Profit & Loss Account as other income (non-operating income), because the firm is earning income from letting out an asset.
It should not be credited to Manufacturing Account because it’s income unrelated to the manufacturing activity itself.
The costs related to the crane (depreciation, repairs, etc.) would be charged to manufacturing or other relevant accounts as usual.
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