Accounting for exchange of fixed assets

This query is : Open

Vishal Shah (Querist)
Follow

04 September 2010 Our client is a trust and it has shown an amount of Rs. 20 lakhs as advance given for a property. This property is a disputed one and so the trust could not occupy it. Thus the trust had not capitalised the asset.

Now the trust sold the property and received another property in exchange which is worth 1.5 crores (stamp duty value)So now how should the accounting treatment be done? At what value should the new property be shown and why?

CA PRAMOD SARAOGI

CA PRAMOD SARAOGI (Expert)
Follow

05 September 2010 You are saying that the property in question is a disputed one then how could you sell or exchange the property

Message likes : 1 times

Vishal Shah

Vishal Shah (Querist)
Follow

05 September 2010 The Title is disputed because when the trust had purchased the property, it got only an agreement of sale in its name and not the conveyance deed.
Thus now,the trust is not acting as a seller party, but it is merely a confirming party and receiving payment to surrender its right to claim on the property in the future

Message likes : 1 times

Upgrade to CAclubindia Pro. Subscribe Now!