10 Replies
Rama chary Rachakonda
(Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294)
(6565 Points)
Replied 01 June 2021
factory lease rent expenses comes under direct expenses.
CA. Sourav Sarkar
(Chartered Accountant )
(24583 Points)
Replied 01 June 2021
CA Altamush Zafar
(GST Consultant)
(15983 Points)
Replied 01 June 2021
It is indirect expenses always
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 02 June 2021
Cost Object: This includes a product, service, cost centre, activity, sub-activity, project, contract, customer or distribution channel or any other unit in relation to which costs are ascertained
Direct Expenses: Expenses relating to manufacture of a product or rendering a service, which can be identified or linked with the cost object other than direct material cost and direct employee cost. Leases is linked to cost object- LEASE CONTRACT (Principle+interest repayments)
Finance costs incurred in connection with the self generated or procured resources shall not form part of Direct Expenses. Lease are not self generated or procured.
Please principal repayment= financing activity.
Leases finance interest repayment= operating activity.
Leases ROU Asset = investing activities.
Examples of Direct Expenses
- Wages
- Factory rent
- Cost of raw material
- Premises renting
- Fuel
- Carriage inwards
Comsidering the above, my qualitative hypothesis suggests that all things used in production are direct expenses. Leased asset is a part of PPE separately presented because, it’s depreciation, amortisation and impairment are inline with PPE standard.
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