Depreciation

Regroup the Security Deposit under the head Non-Current Assets

After that pass the following entry:

Security Deposit  Dr 

To Depreciation(leasehold premised)  Cr

The entry will be:

Security deposit .... Dr.         (Amt of Security Deposit)

     To Leasehold Premises        (Proportionate Balance of Sec Deposit left after Depreciation)

     To Prior Period Adjustments (Remaining Amount (to be adjusted in P/L at year end as per AS-5))

Further u'll have to reclassify it as per Revised Sch VI under head Non Current Assets.

Thanks!!

both Mr.Giridhar and Mr.Ashish jain views are correct.