Lease agreement
This query is : Resolved
06 March 2018
Dear Sir,
We have purchased 5 truks for transporation of our finished goods to our party point . Now we have decided to lease out the trucks to a transporter . Who will pay all the expense relating to the trucks like payment of EMI, truk driver salary , truck running exp.
Now my question is how to deal with this case ?
I am thinking that we should charge from him the lease rental and he will charge from us the transport freight .
Pls advise
We have purchased 5 truks for transporation of our finished goods to our party point . Now we have decided to lease out the trucks to a transporter . Who will pay all the expense relating to the trucks like payment of EMI, truk driver salary , truck running exp.
Now my question is how to deal with this case ?
I am thinking that we should charge from him the lease rental and he will charge from us the transport freight .
Pls advise
06 March 2018
The transaction that you are referring to is largely like Sale and Lease back. In such cases, the essence of the transaction is of importance. If all the EMI and salaries are being paid by them, then additionally it will be appropriate to evaluate the other conditions like whether at the end of the lease period, you will be selling the truck to them or otherwise. If majority of such conditions are met, then it can be classified as finance lease wherein the asset will be capitalised in the books of the lessee.
From commercial point of view, it may be appropriate to charge lease rental and the lessee charges the transport freight.
From commercial point of view, it may be appropriate to charge lease rental and the lessee charges the transport freight.
06 March 2018
No we are not going to sell the truck to them after the end of lease period .
Can we go for rent agreement . We will charge from him a lumsum rent per month and he will charge from us the transport freight simply
Can we go for rent agreement . We will charge from him a lumsum rent per month and he will charge from us the transport freight simply
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