Share this content
2

Can a lease to buy property be an asset?

Didn't find your answer?

Hello all, 

The company I'm doing accounts for are looking into doing a lease to buy on a property which would be used for our everyday services (they are a supported housing service). The lease is for 2-5 years, with an option to buy after 2 years and have to buy after the 5 year term. The lease payments made will be deducted off the price of the property. Can this be classed as an asset on the accounts?

Replies (2)

Please login or register to join the discussion.

Hallerud at Easter
By DJKL
30th Jun 2020 10:14

Sums paid in advance - Debtors over one year seems the most logical place to post these payments, subject of course to checking the contract.

Presume there is a concluded contract in place which states when ownership transfers (at the 2 year or 5 year trigger?) accordingly unless this contract passes ownership upon execution of said contract(which I doubt) it is, imho, not competent to recognise the actual property asset in the accounts at that stage

The key is to read the contract.

Thanks (0)
avatar
By johnt27
30th Jun 2020 11:37

Depending on the contract terms and directors intentions I think you could classify as an asset from the outset but without the detail this is by no means concrete.

Thanks (0)
Share this content

Related posts