Leasehold Property improvements - accounting treatment
A partnership was incorporated several years ago with trading activities transferred to the Ltd and the properties remaining in the LLP. A market rent has been paid to the LLP by the Ltd for the properties due to the fact the make up and relative "shares" of the LLP differing to the Ltd.
The Ltd has funded and developed one property to a significant extent leading to over a doubling in market value of the property and a resultant increase in the market rent. My question is how to treat this fairly in the accounts of the LLP and Ltd?
Currently any improvements paid by Ltd are simply included in the Ltd accounts as leashold property improvements and depreciated over time. Is this still a fair treatment for such significant improvements to a leasehold property?
One option being mooted is to revalue the property in the LLP accounts as the difference between new market value and original market value stripping out the cost of improvements (being accounted for in the Ltd) - would this be sensible?
I guess the LLP cannot expect any market rent increases on the new development having not paid for those improvements
Am I worrying unecessarily and this happens all the time!
Of course as the LLP partners and Ltd shareholder are almost the same (albeit relative share in each business is different) as long as they are happy in the treatment and the value is apportioned betoween the two business by a mechanism they are happy is that the main criterion?
- Setting up a practice 225 4
- Very large share capital by mistake 392 6
- 24 month rule and expenses 162 1
- VAT refund if only output tax on first claim 376 3
- Love is in the air 461 6
- HP agreement in Directors name but payments under company 639 17
- Stamp Duty 284 4
- Physiotherapist and vat and agency work ( one for Les Howard???) 227 4
- I am 34 years old, am I too old to start a career in Accounting ? which is the best way to pursue it 1,773 21
- Another Sneaky Tax Hike! 493 5
- Incorporation of gp practise 187 1
- Sage Instant Accounts Complete De-install problem 254 9
- Auto enrolment confusion 2,014 46
- Client Paperwork Retention? 555 13
- Paid staff their normal salary instead of SMP 566 7
- Tax Overlap Reporting 344 4
- Pay rise - how to enter in Moneysoft 385 9
- Reimbursing director travel costs 439 6
- Allegedly ICAS most of us at 50 should pack up - Interesting 468 8
- Sage 50 VAT Return 290 2
- DTA tie-breaker issue 295
- Tax Implicatins on a Directors Loan 282
- CGT for NOn UK residents 278
- Employer's pension contribution - need to be PAYE registered? 274
- What are the tax implications of overseas sales through a UK based company? 249
- profit or loss on furnishings and deed of trust 237
- Apprenticeship Levy 235
- Tenants in Common - Actual % split not written down 219
- Capital Gains personal representatives 219
- Mandating Rental income or dividend income to a company 194