If a LA outsourced their fitness facilities on a 5yr contract and then agreed to loan the company running the facilities a sum of money to carry out building work as well as purchase equipment, how should the LA deal with this in accounting terms? The loan is to be repaid (plus interest)annually over 5 years. I'm thinking the LA capitalises the building work and not the equipment, which would only have a life of 4yrs anyway. So this CAPEX (buildings work) adds to the balance sheet under 'other land and buildings'. With regards to the loan it is recognised as an asset under short/long-term debtors (credit cash/debit debtors) and written down each year (debit cash/credit debtors) until repaid. If anyone has experience of this your thoughts will be gratefully received!