How to treat A Fixed Asset acquired by Lease.

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RAGHAVENDRA BHAT (Querist)
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12 September 2009 I am from Columbia Asia Hospital P Ltd. One of our vendor has supplied a lab equipment on lease basis. Its market value is around Rs 25lakhs.The agreement is as follows - the vendor supplies the equipment freely, but we have to purchase the consumables which is to be used for that equipment from him only at agreed rate for 5years with a minimum of Rs 50000/-per month. After 5yrs our company will become the owner of the equipment. During this lease period we need to bear AMC cost.How to treat this as Asset in the books??? The estimated life of Asset is 10yrs.Kindly advice.

CA Punit

CA Punit (Expert)
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12 September 2009 Whats is the price of the equipment...?& its estimated life?
The lease will be treated as Finance lease or operating lease depending on above..
Treatment 4 both type of lease agreement differs as per AS-19