Suraj Ltd. (the lessee) acquires machinery on lease from Chand Ltd. (the lessor) on April 1, 2025 for 3 years. The economic life of machinery is…
CA Intermediate · Advanced Accounting · RTP · May 2026
Suraj Ltd. (the lessee) acquires machinery on lease from Chand Ltd. (the lessor) on April 1, 2025 for 3 years. The economic life of machinery is also 3 years. The fair value of the machinery is 2,50,000 and the guaranteed residual value is 2,000. As per the lease agreement, the lessee is required to pay - 1,00,000 per year from April 1, 2025. The lessor has guaranteed a residual value of 20,000. However, lessor estimates that it would have a value of 5,000 only after 3 years. At what value the machinery would be recognised.
Suggested Answer and Working Notes:
Correct Answer: Option (C)
₹ 2,37,400 approx
Topics: AS 19
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