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How figure derived

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P V Gopal

Job

86 Points Posted on 12 September 2020

Dear Experts

Need your help in solving the below.

One informed me on lease rental as below.

But I am unable to calculate how the rent derived and residual value calculated.

Could you please guide me.

Asset Value Rs. 11,40,437

Residual Value Rs. 2,89,688

Repayment period 24 months

GST Rate @ 29.00%

Lease Rental per month Rs. 33,900

GST @ 29% Rs. 9,831

Lease rent in total per month Rs. 43,731

Replies (2)

Quick Summary

This discussion seeks expert help to understand how lease rental and residual values are calculated. The original poster is struggling to reconcile the provided figures for asset value, residual value, repayment period, and GST with the monthly lease rental. They are also exploring the accounting treatment for Right to Use assets and lease liabilities, including the impact of GST and the need for discounting future payments.

yasaswi gomes

My grammar is 💯 good I

5110 Points Posted on 12 September 2020

Initial recognition

43,731*24 months= 10,49,544₹

The current leases treatment recognises RIGHT TO USE ASSET and measured initially at full value of the minimum lease payments along with lease liability (payments).

RTU Asset a/c 10,49,544₹

To Lease liability 10,49,544₹

yasaswi gomes

My grammar is 💯 good I

5110 Points Posted on 12 September 2020

I just remembered that GST is an indirect cost. So, minimum lease payments + direct costs associated with lease - Lease incentives should be recognised initially. That means

RTU Asset a/c 8,13,600 INR

To Lease lability a/c 8,13,600 INR

There is one more thing to work on, you need to discount the future lease payments into PV values. For which, one needs the PV discount rate.