Purchase of Land

This query is : Resolved

Khushbu (Querist)
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22 February 2010 How the asset will be recorded in books of company under IT Act & Company's Act in case of purchase of land and subsequently construction work carried on by the purchaser.
Whether land will be carried at purchase price in books & cost of construction will be carried as capital asset in books on which depreciation will be provided.
Whether practice of carrying both separately in books is correct treatment or not?

CA Chitresh Gupta

CA Chitresh Gupta (Expert)
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22 February 2010 Land and Building will be capitalised sepeately in books of account.

There will be no depreciation on land as having a indefinate useful life.

As regards building, it will be depreciated over its useful life.

Regards