08-15-2009, 06:48 PM
Dear,
Do you know in Pakistan financing the land under leasing arrangements is not allowed. Just to remind local jurisidction's situation. I am not sure about rest of the world. To me this is an irrelavent question for the said reason.
Land has an indefinite period of life, has no known repair and maintenance and insurance costs, and again you cannot quote even a single example of such structured transaction in the financials of a corporatized entity (perhaps worldover). To prove your point, I would again request you to remain focussed on the possibilities, even if you like placing "ifs" and "buts".
I must refer you to study paragraph 14 of IAS-17 which specifically discusses leasing of land and states the reason why it should not generally be treated as finance lease if title is not transferred at the end of lease period. It's indefinite life period issue. If something has been specifically mentioned in IAS we have to follow it. 5 years of lease period in case of land is the thing to keep in view. (In other cases transfer of title is not a condition to treat a lease as finance since life of the asset is not indefinite.)
You also need to re-visit and edit your question which is mixing up the land with buldozer at two different places, for some one who may feel expedient replying this question.
Regards,
KAMRAN.
Do you know in Pakistan financing the land under leasing arrangements is not allowed. Just to remind local jurisidction's situation. I am not sure about rest of the world. To me this is an irrelavent question for the said reason.
Land has an indefinite period of life, has no known repair and maintenance and insurance costs, and again you cannot quote even a single example of such structured transaction in the financials of a corporatized entity (perhaps worldover). To prove your point, I would again request you to remain focussed on the possibilities, even if you like placing "ifs" and "buts".
I must refer you to study paragraph 14 of IAS-17 which specifically discusses leasing of land and states the reason why it should not generally be treated as finance lease if title is not transferred at the end of lease period. It's indefinite life period issue. If something has been specifically mentioned in IAS we have to follow it. 5 years of lease period in case of land is the thing to keep in view. (In other cases transfer of title is not a condition to treat a lease as finance since life of the asset is not indefinite.)
You also need to re-visit and edit your question which is mixing up the land with buldozer at two different places, for some one who may feel expedient replying this question.
Regards,
KAMRAN.
