Renting of a movable property which is stock for business

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06 November 2009 Suppose i have Rs5lakhs worth of gold and now i give it on a monthly rent to a firm. Now when the firm sells it it will increase its profit. Now the profit stated is not correct what will be the treatment in my books and in firms books should i record notional purchase at market value

13 November 2009 Hi Praveen, I m wondering why would the firm take gold on rent? even if this is assumed, how the firm can sell it? Pl. correct ur question and then revert back to me. Thanks and regards,
CA Shakuntala Chhangani

13 November 2009 you given gold to firm on rent, how the gold sell by the firm, firm is not a owner of gold.


14 November 2009 Firm is in the business of gold and i have clause that i should get back the same quantity and purity. Its a movable property for me and a stock in trade for the firm. Now i need not get back the same gold because it may sell off and it will give me back gold of same qty and purity at the lapse of rent period. So now how to account in the books of firm and individual

19 November 2009 then also it is not practical. Movable property can be hired but i have practically never heard of sale of the same. In your question the firm can take gold loan.Here also there is a practical difficulty. the firm will sell d gold and will show it as sales in P/L A/c (cr.) and rent paid on dr. side. however, in the balance sheet, what will it show ? as the gold prics are flexible n the quantity of gold can not be shown into the balance sheet. your question is practically not possible. Thanks and regards, CA Shakuntala Chhangani

20 November 2009 but can we put nominal purchase at market price on the date of rent and show same as stock if in hand

22 November 2009 There is no such provision in AS 2. further how can you show rented item as perchase as you are not the legal owner of the item?

22 November 2009 yes, their is no provision for that.




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