Answer / h.r. sreepada bhagi

Leases are classified as Financial Lease & Operating Lease.
Under IFRS(IAS 17)& Indian GAAP(AS 19) -

A Lease is a Finance Lease if it transfers substantially all
the risks & rewards incident to the ownership.

All Other Leases are classified as Operating Leases.

Under Finance Lease the Lessee Accounts the Asset and claims
depreciation & The Asset will not appear in the books of the
Lessor.
Under Operating Lease the Assets will be shown in the books
of the Lessor & the Lease payments will be treated as Income
in his book. Where as the Lessee shows the lease payments as
expenses.

The treatment of different types of Leases & their sub-types
my differ as per GAAP of any other country. For detailed
information please refer the relevant Accounting Standard
under the applicable GAAP.

Answer / rajesh

There are 2 types of leases Operational lease & Capital
lease.

Capital leases are capitalised at the end of the leasing
period till that time the owener ship is with lessee.

Operational lease is the lease whose ownership is never
transferred.

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