Save Rs 499 on a 2-Year Ad-Free CAclubindia Pro Membership. Subscribe Now!

Building lease assets or liabilities and valuation

608 views 1 replies

yogen

Accountant

105 Points Posted on 31 March 2013

please let me know the below confusion:

we have taken building in lease and we are paying montly rent 250000 per month. and the lease period is for 2 years and it can extend futher in second term.

please let me know whether i should add this in the assets side of the balance sheet or not . and please tell how should i do valuation of this assets.

i shall be very grateful to u.

thankyou in advance.

Replies (1)

Ki$hor B

Training & Advisory

3015 Points Posted on 31 March 2013

hi,
Consider passing following JVs for the building taken on Lease.

(1) Upon entering into lease agreement,
Building on Lease Dr 60L
To Lease Rentals payable 60L

(2) Ist year-end
Lease Rentals Payable Dr
To Bank 30L

P&L Dr.
To Lease Rentals 30L

Further, deduct 30L from 'Building-Lease' in Bal.Sheet.

Repeat similar entries as in (2) for the year2.

You have not mentioned about any advance payment, so the same

is ignored.

Had better wait for some more replies.