Accouting treatement for leased vehicles

This query is : Resolved

Srinivas (Querist)
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07 May 2012 Our company going to take some cars on lease for office purpose (ours is not a travel operator company)

I would like to know the accounting treatment for this, whether these cars to be capitalized in our books or just the car rentals to be booked as expenses.

Guest

Guest (Expert)

07 May 2012 if the cars are taken under finance lease then it has to be capitalised. if its operating lease then lease rrntals are to be expensed out

Srinivas

Srinivas (Querist)
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09 May 2012 Thank you, please let me know how to differentiate operating lease from Finance lease

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CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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11 May 2012 If the cars have been leased for substantially the whole life of the cars, then the lease is to be classified as finance lease, otherwise operating lease.