PDF · As 19
AS 19 Leases Summary Chart: Finance Lease, Operating Lease and Sale and Leaseback
- Shared by
- Kavyansh
- Course
- CA Inter
- Subject
- Advanced Accounting
- Added
- 1 Nov 2026
Part of: CA InterAdv Accounting
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This one-page summary chart covers AS 19 on leases for CA Inter Advanced Accounting. It sets out the key terms used in lease questions, such as minimum lease payments, guaranteed and unguaranteed residual value, and gross and net investment in lease. It then compares finance and operating leases, lists the indicators that classify a lease as a finance lease, and shows how lessee and lessor books are recorded. A short section on sale and leaseback transactions completes the chart. It suits students revising AS 19 shortly before exams or needing a quick recap of the classification and accounting rules.
What the chart covers
The chart starts with the meaning of a lease and the important terminology used in practical questions, including minimum lease payments, guaranteed residual value and unguaranteed residual value. It then explains the two types of lease, finance and operating, and lists eight indicators that help decide whether a lease is a finance lease, such as transfer of ownership, a bargain purchase option, lease term covering the major part of economic life, and specialised nature of the asset. Accounting entries for the lessee and the lessor are shown side by side for both lease types.
How to use it for exam revision
Read the indicators of finance lease first, then practise classifying a lease from a question's facts before looking at the books. The lessee books section shows the lower of present value of minimum lease payments and fair value as the asset value, while the lessor books section shows gross and net investment in lease. The sale and leaseback part has a simple thumb rule: compare carrying amount with fair value, and compare the resulting profit or loss with sale price, which helps in deciding whether the profit or loss is deferred or recognised immediately.
Who should read it
This chart is useful for CA Inter students of Advanced Accounting who are preparing AS 19 for the exam. It works well as a last-day revision sheet, and as a companion to the full standard text when solving lease-based practical questions.
Key topics in these notes
- Finance lease vs operating lease
- Indicators of finance lease
- Minimum lease payments and residual value
- Lessee and lessor accounting entries
- Gross and net investment in lease
- Sale and leaseback transactions
- Initial direct costs
Related notes
Frequently asked questions
What are the indicators of a finance lease under AS 19?
The chart lists eight indicators, including transfer of ownership to the lessee at the end of the lease term, a purchase option at a price substantially lower than fair value, lease term covering the major part of the asset's economic life, and the asset being of specialised nature.
How is the asset recorded in the lessee's books in a finance lease?
The lessee records the asset at the lower of the present value of minimum lease payments and fair value, along with initial direct costs, and charges depreciation and finance charge.
How are profit or loss on sale and leaseback treated?
The chart explains that for a finance lease profit is deferred and amortised over the lease term, and for an operating lease the treatment depends on whether the carrying amount is compared with fair value and the sale price.
Can I get the full note as a PDF?
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