Lease Rent
This query is : Resolved
14 January 2010
what is the disclosure requirement for lease rent in Profit & loss account and under which account head it should be disclosed....
14 January 2010
well show lease rent paid for office and wharehouses for that particular f.y. in rent, rates and taxes of administrative exp.
Regards
Regards
14 January 2010
thanks for the reply, however, further, i would like 2 knw whether separate disclosure requirement is to be made in face of P/L
14 January 2010
Rent should be separately disclosed in the face of the profit and loss account. It should not be clubbed with rates and taxes.
Pl see part II of schedule VI clause 3 (x)(c) and (h).
Pl see part II of schedule VI clause 3 (x)(c) and (h).
14 January 2010
thank you, but my query is whether the disclosure should be as follows or not:
Rent -
Immovable properties
Others
Rent -
Immovable properties
Others
15 January 2010
Not required. You may show Rent with total of both the figures.
17 January 2010
not satisfied
02 August 2024
### **Disclosure Requirements for Lease Rent in Profit & Loss Account**
#### **1. Classification in the Profit & Loss Account**
- **Nature of Lease Rent:** Lease rent payments are typically classified under the head "Other Expenses" in the Profit & Loss Account.
- **Standard Practice:** Lease rent paid for immovable properties (such as buildings and land) should be disclosed under a specific account head that reflects its nature.
#### **2. Disclosure in the Profit & Loss Account**
The presentation of lease rent in the Profit & Loss Account should follow the principles of transparency and clarity. The disclosure should generally be done as follows:
- **Head for Lease Rent Payments:**
- Lease rent for immovable properties (such as land and buildings) should be classified under a separate sub-head or line item within "Other Expenses" or "Administrative Expenses."
- It is not mandatory to provide a separate disclosure for "Immovable Properties" and "Others" unless there is a significant amount of lease rent related to different categories.
#### **3. Recommended Disclosure Format**
- **Under "Other Expenses" or "Administrative Expenses":**
- **Rent - Immovable Properties:** This could include rent for buildings, land, or other fixed assets.
- **Rent - Others:** If applicable, this could include rent for movable properties or other types of rental expenses.
#### **Example Disclosure in the Profit & Loss Account**
```
Other Expenses:
- Lease Rent - Immovable Properties XXXX
- Lease Rent - Others XXXX
```
### **Accounting Standards and Regulations**
- **Indian Accounting Standard (Ind AS) 116 - Leases:** For companies following Ind AS, lease payments are covered under Ind AS 116, which requires detailed disclosure of lease expenses, including variable lease payments and short-term lease payments. Under this standard, lessees should recognize lease liabilities and corresponding right-of-use assets, but lease rent payments are still reported in the P&L account as part of lease expense.
- **Companies Act, 2013:** There is no specific requirement in the Companies Act, 2013 regarding the detailed disclosure of lease rent in the Profit & Loss Account beyond the general requirement to present a true and fair view of the company's financial position.
### **Conclusion**
While it is not mandatory to split lease rent into "Immovable Properties" and "Others," it can be useful for internal reporting and clarity, especially if lease expenses are significant. The primary goal is to ensure that all lease-related expenses are transparently presented in the Profit & Loss Account under appropriate headings, reflecting the nature and amount of the expenses incurred.
#### **1. Classification in the Profit & Loss Account**
- **Nature of Lease Rent:** Lease rent payments are typically classified under the head "Other Expenses" in the Profit & Loss Account.
- **Standard Practice:** Lease rent paid for immovable properties (such as buildings and land) should be disclosed under a specific account head that reflects its nature.
#### **2. Disclosure in the Profit & Loss Account**
The presentation of lease rent in the Profit & Loss Account should follow the principles of transparency and clarity. The disclosure should generally be done as follows:
- **Head for Lease Rent Payments:**
- Lease rent for immovable properties (such as land and buildings) should be classified under a separate sub-head or line item within "Other Expenses" or "Administrative Expenses."
- It is not mandatory to provide a separate disclosure for "Immovable Properties" and "Others" unless there is a significant amount of lease rent related to different categories.
#### **3. Recommended Disclosure Format**
- **Under "Other Expenses" or "Administrative Expenses":**
- **Rent - Immovable Properties:** This could include rent for buildings, land, or other fixed assets.
- **Rent - Others:** If applicable, this could include rent for movable properties or other types of rental expenses.
#### **Example Disclosure in the Profit & Loss Account**
```
Other Expenses:
- Lease Rent - Immovable Properties XXXX
- Lease Rent - Others XXXX
```
### **Accounting Standards and Regulations**
- **Indian Accounting Standard (Ind AS) 116 - Leases:** For companies following Ind AS, lease payments are covered under Ind AS 116, which requires detailed disclosure of lease expenses, including variable lease payments and short-term lease payments. Under this standard, lessees should recognize lease liabilities and corresponding right-of-use assets, but lease rent payments are still reported in the P&L account as part of lease expense.
- **Companies Act, 2013:** There is no specific requirement in the Companies Act, 2013 regarding the detailed disclosure of lease rent in the Profit & Loss Account beyond the general requirement to present a true and fair view of the company's financial position.
### **Conclusion**
While it is not mandatory to split lease rent into "Immovable Properties" and "Others," it can be useful for internal reporting and clarity, especially if lease expenses are significant. The primary goal is to ensure that all lease-related expenses are transparently presented in the Profit & Loss Account under appropriate headings, reflecting the nature and amount of the expenses incurred.
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