Lease of Land and Building under Ind AS

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When a lease includes both land and building elements, then the classification of each element as a finance lease or an operating lease shall be assessed separately.

Land has an indefinite economic life and therefore the land element is normally classified as an operating lease (unless legal title is expected to pass to the lessee by the end of the lease term).

The minimum lease payments are allocated between the land and the buildings element in proportion to the relative fair values of the leasehold interests in the land and building elements at the inception of the lease

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