Leases |
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| LEASES | 15. LEASES
Lessor
The Company’s operating leases for automobile rentals have rental periods that are typically short term, generally is twelve months or less. Revenue recognition section of Note 3 (m), the Company discloses that revenue earned from automobile rentals, wherein an identified asset is transferred to the customer and the customer has the ability to control that asset, is accounted for under Topic 842 upon adoption for the three months ended June 30, 2025 and 2024.
Lessee
As of June 30, 2025 and March 31, 2025, the Company has engaged in offices and parking lot which were classified as operating leases.
The Company leased automobiles under operating lease agreements with a term shorter than twelve months which it elected not to recognize lease assets and lease liabilities under ASC 842. Instead, the Company recognized the lease payments in profit or loss on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred. In addition, the Company had automobiles leases which were classified as finance lease before the disposal of Corenel on April 16, 2025.
The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
The Company recognized lease expense on a straight-line basis over the lease term for operating lease. Meanwhile, the Company recognized the finance leases ROU assets and interest on an amortized cost basis. The amortization of finance ROU assets is recognized on a straight-line basis as amortization expense, while the lease liability is increased to reflect interest on the liability and decreased to reflect the lease payments made during the period. Interest expense on the lease liability is determined each period during the lease term as the amount that results in a constant periodic interest rate of the automobile loans on the remaining balance of the liability.
As of June 30, 2025, the weighted-average remaining operating term of its existing leases is approximately 1.92.
Operating and finance lease expenses consist of the following:
Operating lease cost for automobiles totaled $297,970 and $224,713 for the three months ended June 30, 2025 and 2024, respectively.
Operating lease expense for office and showroom leases totaled $14,375 and $28,783 for the three months ended June 30, 2025 and 2024, respectively, of which $10,843 and $18,812 were amortization of leased asset for operating leases for the three months ended June 30, 2025 and 2024, respectively.
Interest expenses on finance leases totaled $615 and $5,088 for the three months ended June 30, 2025 and 2024, respectively.
The following table sets forth the Company’s minimum lease payments in future periods:
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