A Public Limited Company has entered into a Lease Agreement for usage of 4.5 Acres of Industrial Land in Industrial Park developed by a PSU for 90 years. The terms of lease is Lessee Company to Pay a Lease premium of Rs.2.50 Crores to Lessor upfront and pay an annual lease rent of Rs.450/- for 90 years. The lease premium of Rs.2.50 Crores is payable as Rs.1 Crore on the date of signing the lease by way of allotment of Equity shares of the Lessee company and balance Rs.1.50 Crores in 10 Equal Annual Instalments after an initial moratorium of 2 years.
What are the accounting entries to be passed in Lessee Company books in respect of Lease Premium amount of Rs.2.50 Crores and whether this Premium amount is to be written off in the books of Lessee company during the lease period.
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