Amortisation on land

Pretty interesting query..

a) Treat the money piad towards lease for 99 years as a deposit.......

b) Pass an entry every year 1/99 of the total lease as lease rental ...

Dear Piyush Sir,

The treatment suggested by Nicky Sir is correct.......

Just want to support his answer by saying that AS-19 "Accounting for lease"  specificaly excludes the accounting of lease for use of Land..

So in this case it will be recognised/treated as per General Accounting principles of "Matching Concept" & hence lease premium will be amortised over the lease term..

Further the above answer will change under convergence with IFRS where Lease also includes "lease for use of land"

Thanks Nicky and Amir. But how will they show the land a) as an asset less amortisation every year or b) just booking the lease as expense and showing the balance as deffered expenditure.

Thanks.

Dear Sir,

It will be shown under Fixed Assets as "Land on Lease"....and will be amortised over the lease term....

welll i agree to amir.....

It is known as Lease hold land...................if i m not worng...