what are the types of leasing and their accounting entries?
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Answer Posted / h.r. sreepada bhagi
Leases are classified as Financial Lease & Operating Lease.
Under IFRS(IAS 17)& Indian GAAP(AS 19) -
A Lease is a Finance Lease if it transfers substantially all
the risks & rewards incident to the ownership.
All Other Leases are classified as Operating Leases.
Under Finance Lease the Lessee Accounts the Asset and claims
depreciation & The Asset will not appear in the books of the
Lessor.
Under Operating Lease the Assets will be shown in the books
of the Lessor & the Lease payments will be treated as Income
in his book. Where as the Lessee shows the lease payments as
expenses.
The treatment of different types of Leases & their sub-types
my differ as per GAAP of any other country. For detailed
information please refer the relevant Accounting Standard
under the applicable GAAP.
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