Accounting treatment of Demolition of Building

This query is : Resolved

Sunil Kumar (Querist)
Follow

13 January 2011 If someone demolishes his existing building for construction of new building on the same land. What will be the treatment?
Ex:-
Existing Building Book Value - 2 Crores
New Building Value - 3 Crores.

What will be the treatment?

Will the entire 2 Crore is allowable as depreciation?
I want the accounting treatment also and income tax treatment also.

Thanx

Vivek Raju P

Vivek Raju P (Expert)
Follow

13 January 2011 The entire amount may be written off as impairment as the building will no longer provide the economic benefits.

For income tax purpose, the normal depreciation will be applicable based on the amount in the block as the new building will also be falling in the same block and the block will not be empty.

Other opinions welcome