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    Bhel Use of Estimates: 4 Leases

    Uploaded by

    Abhishek Jain
    The document discusses accounting policies related to use of estimates, fixed assets, and leases. It states that: 1) Preparation of financial statements requires management to make estimates that affect income, expenses, assets, and liabilities. Differences between estimates and actual results are recognized when known. 2) Fixed assets are carried at cost of acquisition or construction less accumulated depreciation and impairment. 3) Assets given or taken on finance leases are capitalized and depreciated according to accounting policies, with lease payments split between finance charges and liability reduction. Assets given or taken on operating leases are treated differently for accounting purposes.

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    Bhel Use of Estimates: 4 Leases

    Uploaded by

    Abhishek Jain
    17 views1 page
    The document discusses accounting policies related to use of estimates, fixed assets, and leases. It states that: 1) Preparation of financial statements requires management to make estimates that affect income, expenses, assets, and liabilities. Differences between estimates and actual results are recognized when known. 2) Fixed assets are carried at cost of acquisition or construction less accumulated depreciation and impairment. 3) Assets given or taken on finance leases are capitalized and depreciated according to accounting policies, with lease payments split between finance charges and liability reduction. Assets given or taken on operating leases are treated differently for accounting purposes.

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    BHEL

    Original Title

    BHEL

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    The document discusses accounting policies related to use of estimates, fixed assets, and leases. It states that: 1) Preparation of financial statements requires management to make estimates that affect income, expenses, assets, and liabilities. Differences between estimates and actual results are recognized when known. 2) Fixed assets are carried at cost of acquisition or construction less accumulated depreciation and impairment. 3) Assets given or taken on finance leases are capitalized and depreciated according to accounting policies, with lease payments split between finance charges and liability reduction. Assets given or taken on operating leases are treated differently for accounting purposes.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    17 views1 page

    Bhel Use of Estimates: 4 Leases

    Uploaded by

    Abhishek Jain
    The document discusses accounting policies related to use of estimates, fixed assets, and leases. It states that: 1) Preparation of financial statements requires management to make estimates that affect income, expenses, assets, and liabilities. Differences between estimates and actual results are recognized when known. 2) Fixed assets are carried at cost of acquisition or construction less accumulated depreciation and impairment. 3) Assets given or taken on finance leases are capitalized and depreciated according to accounting policies, with lease payments split between finance charges and liability reduction. Assets given or taken on operating leases are treated differently for accounting purposes.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    BHEL

    Use of Estimates
    The preparation of financial statements in conformity with generally accepted accounting
    principles requires the Management to make estimates and assumptions that affect the income
    and expenditure during the reporting period and the assets and liabilities including contingent
    liabilities at the date of financial statements. The differences between actual results and estimates
    are recognised in the period in which results are known.

    Fixed Assets
    Fixed assets (other than land acquired free from State Government) are carried at the cost of
    acquisition or construction or book value less accumulated depreciation and impairment, if any.

    4 Leases
    Finance Lease
    A) (i) Assets Given on Lease Prior to 1st April 2001

    Assets manufactured and given on finance lease are capitalized at the normal sale price/fair
    value/contracted price and treated as sales. Depreciation on the same is charged at the rate
    applicable to similar type of fixed assets as per Accounting Policy on Depreciation. Against
    lease rentals, matching charge is made through Lease Equalisation Account.
    Finance income is recognised over the lease period.
    (ii) Assets Given on Lease on or after 1st April, 2001

    Assets manufactured and given on finance lease are recognised as sales at normal sale price / fair
    value/ NPV. Finance income is recognised over the lease period. Initial direct costs are expensed
    at the commencement of lease.
    B) Assets Taken on Lease on or after 1st April 2001

    Assets taken on lease are capitalised at fair value / NPV / contracted price. Depreciation on the
    same is charged at the rate applicable to similar type of fixed assets as per Accounting Policy
    on Depreciation. If the lease assets are returnable to the lessor on expiry of leaseperiod, the
    same is depreciated over its useful life or lease period, whichever is shorter.
    Lease payments made are apportioned between finance charges and reduction of outstanding
    liability in relation to assets taken on lease.
    Operating Lease
    A) Assets Given on Lease:

    Assets manufactured and given on operating lease are capitalised. Lease income arising
    therefrom is recognized as income over the lease period.
    B) Assets Taken on Lease:

    Lease payments made for assets taken on operating lease are recognised as expense over the
    lease period.

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