Operating Lease Rentals
Also called: Equipment Hire, Short-term Lease Expense
Hire charges for equipment, vehicles or space under short or low-value leases that stay off the Balance Sheet, on the Profit and Loss statement.
In detail
Operating Lease Rentals is for short or low-value hire of equipment or vehicles: a tourist bus for a three-day trip, a projector for an event. NFRS 16 lets such short-term and low-value leases be expensed as paid instead of being capitalised as right-of-use assets. The hire company's bill is posted as a Purchase Invoice to this ledger, and if the supplier charges VAT the 13 percent is claimable. Vehicle hire is subject to TDS, 1.5 percent for a VAT-registered transporter and 2.5 percent otherwise, applied through the Nepal TDS - Freight / Vehicle Rental categories on the supplier. Long leases of the office belong under Lease Liabilities, and regular premises rent in Office Rent.
Formula
Operating Lease Rentals for the period = Hire charges for the days or months used, excluding claimable VAT
Accounting entry
| Account | Debit | Credit |
|---|---|---|
| Operating Lease Rentals | Rs 18,000 | |
| Creditors (bus operator) | Rs 18,000 |
How to record it in BRAccount
- 01Go to Buying > Supplier and set the transporter's Tax Withholding Category to the matching Freight / Vehicle Rental rate.
- 02Go to Buying > Purchase Invoice > New, pick the supplier and post the hire charge to Operating Lease Rentals.
- 03Choose cost center Marketing - YFF or Main - YFF depending on the trip.
- 04Submit. The entry below posts, with TDS credited to TDS Payable if a category applies.
- 05Pay the supplier with Create > Payment Entry from the invoice.
When to use it
Post by Purchase Invoice for hires under twelve months, such as a bus for a tour or a photocopier on monthly rent.
Example from the demo books
Dr Operating Lease Rentals Rs 18,000, Cr Creditors Rs 18,000 for a tourist bus hired for a three-day Pokhara trip.