Ad-Free CAclubindia and Daily Updates on your mobile. Subscribe Now!

Leases

Sanjib Kumar Mondal (Passionate Learner) (117 Points)

28 January 2016

Why is AS 19 not applicable in case of exploration of natural resources? What accounting treatment is done by companies like Indian Oil, BP etc ?

Reply
Follow
Share

6 Replies

JOEY TRIBIONI (Article) (200 Points)
Replied 28 January 2016

Are you talking about AS19 leases or IND AS 19 Employee Benifits?

Upgrade to CAclubindia Pro. Subscribe Now!

Sanjib Kumar Mondal (Passionate Learner) (117 Points)
Replied 28 January 2016

I am talking about Accounting Standard 19 -Leases.

JOEY TRIBIONI (Article) (200 Points)
Replied 28 January 2016

INDIAN OIL CORPORATION

Operating Leases:

Lease rentals are recognized as expense or income on a straight line
basis with reference to lease terms and other considerations except
where another systematic basis is more representative of the time
pattern of the benefit derived from the asset taken or given on lease.

Finance leases as lessee:

The lower of the fair value of the assets and present value of the
minimum lease rentals is capitalized as fixed assets with corresponding
amount shown as lease liability. The principal component in the lease
rental is adjusted against the lease liability and the interest
component is charged to Statement of Profit and Loss as Finance Cost.

Depreciation on the assets taken on finance lease is charged in the
same manner as applicable to similar type of owned fixed assets. If the
leased assets are returnable to the lessor on the expiry of the lease
period, full cost is depreciated over its useful life or lease period,
whichever is less.

Finance leases as lessor:

All assets given on finance lease are shown as receivables at an amount
equal to net investment in the lease. Principal component of the lease
receipts are adjusted against outstanding receivables and interest
income is accounted by applying the interest rate implicit in the lease
to the net investment