Depreciation query
Disha Bhawnani (CA, CS) (350 Points)
31 July 2015Disha Bhawnani (CA, CS) (350 Points)
31 July 2015
Rajagopalakrishnan R
(PARTNER)
(1422 Points)
Replied 31 July 2015
The sentence you refer to clarifies the accounting for depreciation of an asset which is leased/hired out by its owner. Frequently the difference between a finance lease( HP) and an operating lease is very thin especially for assets like vehicles etc. In such a case a test which can decide who should claim depreciation ( i.e who is the owner) is clarified by the above sentence. If the financier accounts for interest income, then the owner is the person who has availed the finance. If the financier accounts for lease rent (i.e the entire amount of mnthly instalment) then he can claim depreciation