CA Amit Goyal (PARTNER) (71 Points)
20 July 2009Can any one explain the treatment of 99 year lease hold land.
i.e i have purchased one land on lease of 99 year amounting to Rs. 99 lacs. Whether i need to amortised the land value on the basis of 99 year or i can keep the full amount in my fixed assets block.
Regards,
CA Amit Goyal
sivaram
(Asst Mgr-Taxation)
(6918 Points)
Replied 20 July 2009
the land has to be amortised.but in books leasehold land is shown as historical cost and amortisation is credited to accumulated depreciation
CA Amit Goyal
(PARTNER)
(71 Points)
Replied 20 July 2009
| Originally posted by :sivaram | ||
| " | the land has to be amortised.but in books leasehold land is shown as historical cost and amortisation is credited to accumulated depreciation | " |
Thanks for reply...
can u please explain me under which AS or Law we can amortised the lease hold land and It there any way to justify to client regarding the same.
sivaram
(Asst Mgr-Taxation)
(6918 Points)
Replied 20 July 2009
Read AS-10 Accounting for Fixed Assets and also AS28 on Impairment of Assets
CA Amit Goyal
(PARTNER)
(71 Points)
Replied 21 July 2009
hi Sivaram
As per my understanding there is nothing has been given in the AS 10 and AS 28 regarding the Amortisation of Lease hold land. If u have any specific Details ragarding the same please share with us.
Thanks.
Nikhil Rungta
(Analyst - ICRA Limited)
(385 Points)
Replied 21 July 2009
Its not mentioned in the Accoutni9ng Standard. However, the industry practise is to amortise it over a period of 99 years while the amoiunt has to be shown in accumulated depre. accounts as pointed out by Sivaram...
CA Amit Goyal
(PARTNER)
(71 Points)
Replied 21 July 2009
What if the company is not amorised it in ealrier year.
There should be some vaild point to discuss with the client and also need some rules to support the same.
I m already aware that we need to amortised it but under which law or rule we have to do it. What if someone is not ready to follow the same ?
Regards,
CA Amit Goyal
shraddha
(Article)
(26 Points)
Replied 17 July 2010
Hello! I have come accross this case while auditing and really need help!!
There is this firm which has taken a land on lease from government and for which it has to make 10 semi annual payments. It has already made 4 payments. The lease deed was executed in 2008. How will we show this in our books?can we capitalize it despite the fact the the entire payment can be made?how much can we capitalize, the entire amount payable or the amount actually paid?
also how wil we amortize?should the entire amount payable be amortized every year for 90 years or the amount paid?
please help!!
CAclubindia
