Question

The lease inception was determined as 1 August 2022 A lease premium of R80 000 is payable monthly in arrears *The lease is 15 years with an option to extend for a further 5 years.Lebelok is till undecided whether tbe option to extend will be utilised or not. Lebelok commenced with the improvements on 10 August 2022. A total amount of R280 000 was spent to effect the improvements and the completion date was marked as 31 August 2022 by a property inspector

Required: Calculate the leasehold expenditure financial year period 1April 2022- 31 March 2023

Answer 1

To calculate the leasehold expenditure for the financial year period of 1 April 2022 to 31 March 2023, determine the portion of the lease premium and improvement cost that falls within this period. Multiply the number of months from 1 April 2022 to 31 August 2022 by the monthly lease premium and add it to the improvement cost.

Step-by-step explanation:

The leasehold expenditure for the financial year period
1 April 2022 - 31 March 2023
can be calculated by considering the portion of the lease premium and improvement cost that falls within this period.

Since the lease inception was on 1 August 2022 and the improvements were completed by 31 August 2022, only a portion of the lease premium and improvement cost will be accounted for in this financial year.

To calculate the leasehold expenditure, you need to determine the number of months from 1 April 2022 to 31 August 2022, multiply that by the monthly lease premium, and add it to the improvement cost.