04 May 2010
A firm is engaged in the business of real estate developments. A partner of the firm introduced a piece of land as his capital contribution to the firm. The said land would be used by the firm for its business purpose. In its books of accounts, whether the firm can record the land, brought in by the partner as his capital contribution, as stock-in-trade?
04 May 2010
Anything brought in by the partner at the time of admission or at a later point of time is treated as his capital contribution whether in cash or in kind and is to be accounted accordingly. The journal entry will be as below:- Cash/Bank/Fixed Assets/Stock/etc A/C Dr To Mr X's Capital A/C
05 May 2010
What I want to know is that the land which otherwise is in the nature of fixed/capital asset, when brought in the partnership firm, can the firm treat the same as its stock-in-trade? Instead of treating the same as fixed/capital asset.
CAclubindia
