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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Short lease: Allowable expense
Hello,
Thank you for reading my query.
After we have calculated the allowable part of the short lease premium as “rent paid in advance”, we need to divide it over the number of years of the lease to calculate the allowable expense FOR THE YEAR.
Now should we compound these values considering the TIME VALUE OF MONEY, as money will keep losing its value over say, 21 or 41 years, so the benefit will get reduced if we get to deduct the same amount in the later years?
Waiting for your response.
Thanks and regards,
Ahmed.
No compounding or discounting!! When a business pays a premium on the granting of a short lease we calculate the annual trading profit deduction to be deducted in each and every year the property is used within the trade!