The Company made the land rental contract with ZA co., ltd.(lessee), and the Company accepted the lessee to demolish the buildings of lessor which the lessee will pay this demolishing expense by themselves, the Company should recognize this expense to be the company’s income or not?
Panwa: Please note that it should consider the condition and purpose of contract, if it specifies that the Company should deliver the empty land to a lessee, the Company should include the demolishing expense (it was paid by lessee) as the rental income also.
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