02 March 2018
One of my friend is starting up an agriculture business as a partnership. The have taken a land for lease to cultivate their crops. The land owner claims profit share from the business instead of fixed lease/rental payments. can any one let me know how to account this expense? under what nature of expenses?
Is there any restriction under any law for this kind of agreement between land owner (consideration for use of land as profit share from agriculture business)?
02 March 2018
Thanks for your reply... But the land owner is not a partner in the business... he just giving his land for cultivation... so accounting as profit share means, do we need to put this agreement as part of the Partnership deed ?
02 March 2018
No need of part of partnership agreement. Enter land lease agreement specifying lease amount is based on profit earned on cultivation of land. Then such payment will be accounted as lease payment expenses.
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