Construction of pond on leasehold land

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Querist : Anonymous

Querist : Anonymous (Querist)

08 April 2015 What will be accounting treatment of Pond constructed on Leasehold land? Will it be amortized during Lease period or will it be depreciated as a separate asset?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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08 April 2015 It has to be depreciated over the useful life or lease period which ever is less.

Querist : Anonymous

Querist : Anonymous (Querist)

08 April 2015 Actually what has been done is on leasehold land, soil has been removed from a part to another which made it a pond. Infact no use of materials has been done in the said case. In above case following are my queries:
1. Whether at all this is a capital expenditure?
2. Whether this expenditure can be capitalised with the leasehold land and charged off within the left lease period?
3. If it is to be capitalised, then under what head?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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08 April 2015 What purpose the soil has been removed. Are you using the pond for any purpose.

Querist : Anonymous

Querist : Anonymous (Querist)

08 April 2015 Soil has been removed for some other purpose and the intention was never to built pond.
But since the pond is the outcome what should be done?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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08 April 2015 You have not spend any amount for creation of pond hence so no depreciation or amortization will arise.

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