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Depreciation of leasehold land taken on perpetual lease from Government


Land is taken from Government on perpetual lease (Non Cancellable lease from Government side). Since there is no lease period defined or mention on lease agreement, how to depreciate/ amortize land? Leasehold land with building constructed on it is further given to unrelated party on rent for 10 years.

asked Nov 24 in IAS 40 - Investment Property by Pawan Kumar

1 Answer

0 votes
When the land has an indefinite economic life, the land element is normally classified as an operating lease unless title is expected to pass to the lessee by the end of the lease term, in accordance with paragraph 14 of IAS 17. The buildings element is classified as a finance or operating lease in accordance with paragraphs 7-13.(IAS-17)
answered Nov 24 by umarhussainia Level 5 Member (11,320 points)


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