Accounting treatment for land lease

This query is : Resolved

A. Prithvi Surya (Querist)
Follow

13 September 2011 Dear Experts,

A Private Company which is a manufacturing unit is having 110 acres of Freehold Land and has Leased 2 acres of Land for 99 years. What should be accounting treatment for such transaction??

Thanking you in advance

Prithvi

CA Sumat Singhal

CA Sumat Singhal (Expert)
Follow

17 September 2011 For complete details refer AS 19 accounting for leases.

A. Prithvi Surya

A. Prithvi Surya (Querist)
Follow

18 September 2011 Sumit Land doesn't fall under the given standard...

CA Pushpendra Gaur

CA Pushpendra Gaur (Expert)
Follow

26 September 2011 Well, in case of Free hold land, same is required to be recorded at cost and no depreciation is required to be charged. Also, upward revaluation is premissible, if the increase in the value of land is permenant by creating revaluaation reserve.

In case of leasedhold asset, you are required to charge the depreciation as per straight line method, or if the lease rent is paid on annual basis, then the annual lease rent will be charged to profir & loss a/c directly and any lump-sum amount paid in advance is required to depreciated on SLM basis

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now