What is the treatment of lease equilisation reserve as per AS 19?
1 Replies
Bhanu Prakash Rao
(Think Beyond Stay Ahead...!)
(1064 Points)
Replied 07 August 2012
Hi Tanvi
Prior to 1.04.2001 the “Guidance Note on Accounting for Leases” was applicable on leasing industries. This Guidance Note was based on the matching principle i.e. the periodic costs comprising of depreciation and lease equalization charges were recommended to be matched with lease rentals so that the net income from a finance lease will show a true and fair view. For this Lease Equalization Reserve used to be created.
Later introduction of AS-19 the above said GN stands withdrawn.
Best Regards.
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