IFRS 16 for underdeveloped land
Posted: 06 Mar 2024, 05:21
Hi everyone
Require your help here. My company is a lessor who has leased out an underdeveloped land to a tenant to develop it in phases. They paid us $5M in advance two years ago and because the agreement was at PDA stage, the $5M were staying in deferred revenue account. Starting 2023, they paid us $1M and also asked for extension of PDA.
We have now given them extension for another six months to determine if they will be moving forward with the lease or exiting the contract (in that case $6M will not be refunded). $1M is currently recognized in revenue while $3.8M is in B/S
Our auditors have asked us to recognize the all the revenue based on Straight line basis. Pls suggest. Remember it is 0 value land until developed.
Require your help here. My company is a lessor who has leased out an underdeveloped land to a tenant to develop it in phases. They paid us $5M in advance two years ago and because the agreement was at PDA stage, the $5M were staying in deferred revenue account. Starting 2023, they paid us $1M and also asked for extension of PDA.
We have now given them extension for another six months to determine if they will be moving forward with the lease or exiting the contract (in that case $6M will not be refunded). $1M is currently recognized in revenue while $3.8M is in B/S
Our auditors have asked us to recognize the all the revenue based on Straight line basis. Pls suggest. Remember it is 0 value land until developed.