## Operating Lease – Output Basis (Special Case)
### When SLM Is Not Used
AS 19 allows departure from straight-line recognition when another systematic basis is more representative of how the benefit from the leased asset is consumed.
The most common alternative: Output Basis — allocate total lease cost in proportion to the units of output expected from the asset each year.
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### Method
1. Calculate Total Lease Rent for the entire lease term (annual rent × years)
2. Determine the output ratio across years (units expected each year)
3. Allocate total rent in that ratio → this becomes the P&L charge each year
4. Difference between amount charged to P&L and actual cash paid goes to Lease Equalisation A/c
$$\text{Lease Rent for Year } n = \frac{\text{Units in Year } n}{\text{Total Units}} \times \text{Total Lease Rent}$$
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### Journal Entries (Lessee)
Same structure as SLM entries — only the amount charged to P&L changes:
```
Lease Rent Expense (P&L) Dr (output-apportioned amount)
[Lease Equalisation A/c Dr if actual paid > P&L charge]
To Cash/Bank A/c (actual rent paid)
[To Lease Equalisation A/c if actual paid < P&L charge]
```