Lease Rent

This query is : Resolved

VINITHA RAJESH (Querist)
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23 November 2010 Hi,

When a person enters into the lease agreement, he is supposed to pay the rent amount in advance. This can be as a lumpsum amount for the lease period together or split into instalments.
How do we treat this amount in the book of accounts.

In this case, the lease is towards land and so AS 19 is not applicable.

CA. BHAVIK DILIPBHAI MEHTA

CA. BHAVIK DILIPBHAI MEHTA (Expert)
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28 November 2010 The rent amount paid in advance may be shown as deferred revenue expenditure & may be written off over the period of lease.

In case the same is split into installments then the same may be booked as expense in profit & loss account.