What should be the accounting treatment for capital expenditure incurred on a leased asset by lessee. No reimbursement of exp. is done by lessor. Please cite the applicable para of AS also.
2 Replies
Jayalakshmi Anshuman
(Chartered Accountant)
(69 Points)
Replied 11 December 2012
Assets under finance lease (in the books of lesee) should be classified separately under the respective asset class. Refer AS 19 - Para 11 to 25.
Leasehold improvements should be shown as a separate line item as a separate asset class. (Refer Revised Schedule VI). Leasehold improvements will come under the purview of AS - 10 and AS - 6.
For Income tax purposes, leasehold improvements will be treated as revenue and not capital expenditure.
CA Abhilasha Bhagat
(ACA)
(466 Points)
Replied 11 December 2012
Thank u mam. My Question is related to "leasehold improvements" in nature of capital exp. only. Can u cite para no. of AS-10, which says leasehold improvement should be recognised as asset?
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