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Leases

6 Months Ended

Sep. 30, 2024

16. 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 (l), 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 six months ended September 30, 2024.

Lessee

As of September 30, 2024 and March 31, 2024, the Company has engaged in offices and showroom leases 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.

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 September 30, 2024, the weighted-average remaining operating and finance lease term of its existing leases is approximately 0.67 and 1.03 years, respectively.

Operating and finance lease expenses consist of the following:

		For the Three Months Ended				For the Six Months Ended
	Classification	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Operating lease cost
Automobile lease costs	Cost of revenues	$	257,317	$	544,982	$	482,030	$	1,060,856
Lease expenses	Selling, general and administrative		22,740		60,486		51,523		125,772
Finance lease cost
Amortization of leased asset	Cost of revenue		59,696		58,991		118,757		120,659
Amortization of leased asset	General and administrative		—		—		—		282
Interest on lease liabilities	Interest expenses on finance leases		4,270		7,594		9,358		16,316
Total lease expenses		$	344,023	$	672,053	$	661,668	$	1,323,885

Operating lease costs for automobiles totaled $257,317 and $544,982 for the three months ended September 30, 2024 and 2023, respectively. Operating lease cost for automobiles totaled $482,030 and $1,060,856 for the six months ended September 30, 2024 and 2023, respectively.

Operating lease expenses for offices and showroom leases totaled $22,740 and $60,486 for the three months ended September 30, 2024 and 2023, respectively, of which $14,659 and $45,509 were amortization of leased asset for operating leases for the three months ended September 30, 2024 and 2023, respectively. Operating lease expense for office and showroom leases totaled $51,523 and $125,772 for the six months ended September 30, 2024 and 2023 respectively, of which $33,471 and $93,179 were amortization of leased asset for operating leases for the six months ended September 30, 2024 and 2023, respectively

Interest expenses on finance leases totaled $4,270 and $9,358 for the three and six months ended September 30, 2024, respectively. Interest expenses on finance leases totaled $7,594 and $16,316 for the three and six months ended September 30, 2023, respectively.

The following table sets forth the Company’s minimum lease payments in future periods:

	Operating lease			Finance lease
	payments*			payments			Total
	(Unaudited)			(Unaudited)			(Unaudited)
Twelve months ending September 30, 2025	$	32,256		$	414,302		$	446,558
Total lease payments		32,256			414,302			446,558
Less: discount		(463	)		(8,200	)		(8,663	)
Present value of lease liabilities	$	31,793		$	406,102		$	437,895

*	As of September 30, 2024 and March 31, 2024, the outstanding balance of operating lease payments due to a related party was $31,793 and $51,741, respectively.