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Equipment purchased for rental - are they inventory?


We are in the business of renting office IT equipment like computers and printers. When we buy such equipment, should we treat them as out assets and depreciate or account for as inventory?

asked Jan 4 in IAS 16 - Property, Plant and Equipment by Jami
As per IFRS 16, Property Plant & Equipment,  they means inter alia held for rentals.
So it is asset and need to be depreciated and not a stock as objective of business not to earn from selling.
Stock once transferred can't  be regained but here ownership lies with you.  So it's  not stock
If the equipment is rented out then you have to consider IAS 17 leases or the new leases standard IFRS 16. IAS 16 may not be so relevant as your entity is not using the asset themselves to generate revenue. You should consider being a lessor and the person you have rented to being the lessee.

3 Answers

0 votes
They should be recorded as assets and depreciated
answered Jan 11 by Visio Level 5 Member (24,620 points)
0 votes
Inventories are made or purchased for resell. For a retal business, you are not selling your equipment, therefore they should be treated as assets. Also, inventories have neither life span nor salvage value on disposal but the equipment of a retal business can be disposed after their expected life span for a consideration. Therefore, the equipment of a rental business should be treated as assets and be depreciated.
answered Apr 10 by BenJC
0 votes
i think they should be treated as inventory (apply IAS 2); since your nature of/core business is renting out these IT equipment
answered Apr 10 by anonymous


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