Accounting standard 19 - Leases and its Accounting Treatment ( AS 19 )

>> July 8, 2009


Accounting standard 19 states that transaction of leases should be recorded in the books of account and also should show in financial statement with proper way .
If we see dictionary meaning of lease , then we find that it is simple contract in which one person allows another person to use of land and other person gives rent for using land . But AS 19 defines leases in wide sense .

According to accounting standard 19 , “ Leases include all agreement for

(I) use of natural resources like oil , gas , timber , metal , mineral rights and land

( II ) Licensing agreement for producing film , plays and video recording .

It also divides leases into two major categories

( I ) financial lease


It is the agreement to purchase any fixed asset on installment, so financial lease must be shown asset and liability equal to present value of minimum lease payment from standpoint of the lease.

(II ) Operating lease

It is just contract only use of fixed asset and payment will be shown as expenses in the books of lessor (Customer )





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1 comments:

Anonymous,  February 7, 2013 at 2:44 AM  

short & sweet reference.. good 1

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