Senmiao Technology Ltd Leases Disclosure

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 (p), 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 years ended March 31, 2025 and 2024.

 

Lessee

 

As of March 31, 2025 and 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 March 31, 2025, the weighted-average remaining operating and finance lease term of its existing leases is approximately 0.17 and 0.53 years, respectively.

Operating and finance lease expenses consist of the following:

 

				For the Years Ended
		Classification		March 31, 2025				March 31, 2024
Operating lease cost
Automobile lease costs		Cost of revenues		$	977,768			$	1,737,869
Lease expenses		Selling, general and administrative			78,268				196,327
Finance lease cost
Amortization of leased asset		Cost of revenue			237,053				239,353
Amortization of leased asset		General and administrative			—				276
Interest on lease liabilities		Interest expenses on finance leases			15,145				29,088
Total lease expenses				$	1,308,234			$	2,202,913

 

Operating lease cost for automobiles totaled $977,768 and $1,737,869 for the years ended March 31, 2025 and 2024, respectively.

 

Operating lease expense for office and showroom leases totaled $78,268 and $196,327 for the years ended March 31, 2025 and 2024, respectively, of which $53,272 and $158,398 were amortization of leased asset for operating leases for the years ended March 31, 2025 and 2024, respectively.

 

Interest expenses on finance leases totaled $15,145 and $29,088 for the years ended March 31, 2025 and 2024, respectively.

 

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

 

		Operating lease				Finance lease
		payments*				payments				Total
Twelve months ending March 31, 2026		$	10,466			$	362,424			$	372,890
Total lease payments			10,466				362,424				372,890
Less: discount			(101	)			(2,156	)			(2,257	)
Present value of lease liabilities		$	10,365			$	360,268			$	370,633

 

*	As of March 31, 2025 and 2024, the outstanding balance of operating lease payments due to a related party was $10,365 and $51,741, respectively.