410-Financial Accounting

And auditing-1TOPIC – LEASE ACCOUNTING

PRESENTED BY

RANA BINITAM.COM SEM –II

(ROLL NO. - 60)

CONTENTS

INTRODUCTIONMEANING OF LEASEHIRE PURCHASE & LEASING

INTRODUCTION

In Our Daily Life We Come Across Arrangements like taking cycle ,scooter & motor cars on rent for certain hours or days. thus,the asset is available for use for a very short period from the owner.but in case, an asset is given to some person for his use for long period by its owner, in return for a rent, it is called lease.

To maintain the account of this types of transaction it is called lease accounting

MEANING

According to JAMES C.VAN HORNE,

‘‘A lease is a contract whereby the owner of a asset(lessor) grants to another party(lessee) the exclusive right to use the asset,usually for an agreed period of time, in return for the payment of rent.’’

HIRE PURCHASING & LEASINGPOINTS HIRE PURCHASE LEASE

MEANING By Installment By Rent

OWNERSHIP Become An Owner Not Become An Owner

DEPRECIATION Get The Benefit Does Not Get The Benefit

ACCOUNTING ENTRIES

Shown As Asset And O/S Amount Shown As Liabilities

Does Not Shown As Asset As Well As Liabilities

PROVISION OF FINANCE

Required To Make Initial Payment

Does Not Required To Make Initial Payment

REPAIRS & MAINTENANCE

Have Responsibility Have Not Responsibility

AMOUNT OF INSTALLMENT OR RENT

Includes Only Interest Includes Cost Of Asset,Interest,Maintenance & Profit

TYPES OF ASSETS

Not Highly Price Assets Highly Price Assets

Thank you