Machinery purchase for lease purpose

This query is : Resolved

bhoop (Querist)
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19 October 2012 Dear Experts

We purchased a machine and lease out for one year or may be more to our customer on rent.

But I am confusing to decide whether it is our Fixed Assets or Inventory Item. Because when lease period overed we will try to sell the items to some other customer.

Could you clarify me on the matter.

Thanks
Bhoop Singh

Gurcharan

Gurcharan (Expert)
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20 October 2012 As you have given this machine on rent / lease for about one year, the asset purchased should continue to be treated as a Fixed Asset and depreciated over its useful life. The rent received from the machine leasing should be treated as part of Revenue.