Leaseholder purchases Freehold

Leaseholder purchases Freehold

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Partnership leased a pub and had a cost of £80k for leasehold property on the balance sheet

Partnership now purchases freehold of the property

What happens to the £80k?  Does it get added on to the freehold value?

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By deltaforceaccountant
29th Jul 2010 17:03

More information needed... get out the anglepoise light and int

Have you seen any documentation relating to the £80k paid? Are you sure it related directly to the leasehold property and not anything else like goodwill? If it related to a premium on a new lease what happened to the lease when the property was bought by the partnership? etc.. Once you establish exactly what happened, the correct accounting treatment will follow.

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By sarahg
29th Jul 2010 17:08

Thank you

Assuming that it definitely was for a lease, then the lease would cease when the same partnership purchases the freehold, so would the balance on the lease be added to the freehold cost?

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