Renovation work in leased land

455 views 2 replies

Dear Sir,

Our company engaged in contract work for this purpose we need manpower,equipement,stock yard etc. for fulfill this need we leased 40000 sq meter land includes two old buildings for 3 years . (in this building we are planning to accomodate site staffs and labours) these building need repair work for this case we are purchasing materials like- cement ,sand , plumbing items , electricals items , wall tiles, paints etc . 

as per lease agreement total lease amount rs 18,00,000/- for 3 years

mutually agreed payment terms -6 Lacs for each year 

My questions are

  1. How i treat this transactions ?
  2. Purchase of builindg repair items accounting
  3. Purchase of capital items for this builinding accounting

Thanks

Sabarinath

 

Replies (2)

You have a lease agreement with a total lease amount of ₹18,00,000 for 3 years, with mutually agreed payment terms of ₹6 Lacs per year. You're wondering how to treat these transactions in your accounting records. Here's a suggested approach: 1. *Lease Payments*: - Treat the lease payments (₹6 Lacs per year) as *Rent Expenses* in your Profit & Loss Account (Income Statement). - Record the payments as they are made, using the following entry: - Debit: Rent Expenses (₹6,00,000) - Credit: Bank/Cash (₹6,00,000) 2. *Building Repair Items*: - Treat the purchase of building repair items as *Revenue Expenditure*. - Record the purchase as an expense in your Profit & Loss Account (Income Statement). - Use the following entry: - Debit: Repairs & Maintenance Expenses (₹XXXX) - Credit: Bank/Cash (₹XXXX) 3. *Capital Items*: - Treat the purchase of capital items for the building as *Capital Expenditure*. - Record the purchase as an asset in your Balance Sheet. - Use the following entry: - Debit: Assets (₹XXXX) - Credit: Bank/Cash !

Sir What about . this transaction treated under asset as right to asset : becouse our company spend a huge amount. we would like to book under asset

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
10 June 2026
Senior Account Executive

JDS Advisory LLP

Ahmedabad

CA Inter

View Details
Company
ARTICLESHIP 09 June 2026
Article Trainee

Numbertree LLP

Mumbai

CA Inter

View Details
Company
29 June 2026
Accountant (Finance & Compliance)

TRIEYEZ

Kolkata

CA

View Details
Company
ARTICLESHIP 04 June 2026
Article

Rakhecha & Co.

New Delhi

CA Inter

View Details
Company
20 June 2026
Assistant Accounts Manager

Fintax Professionals

Gurgaon

CA Inter

View Details
Company
Featured 24 June 2026
HEAD - AUDIT AND TAXATION

A R JADHAV AND ASSOCIATES

Mumbai

CA Inter

View Details
Company
ARTICLESHIP 24 June 2026
CA Article Trainee

Rahul Dang & Associates

Pune

CA Inter

View Details
Company
ARTICLESHIP 28 June 2026
Article Assistant

Sharma Chetan And Company

Gurgaon

CA Inter

View Details