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
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₹
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.
Karia Overseas
Ahmedabad
CA
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O P Bagla & Co LLP
New Delhi
CA Inter
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