Accounting under Development Agreement

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Anshuman Bardhan (Querist)
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05 December 2009 In a case where there is a Developer Agreement between owner of land and developer and the owner gets a certain share of the constructed building as his allocation then please give your opinion on the following matters -
1. How will the developer account for the owners allocation when the building is complete. I mean whether to pass any accounting entries, if so what.
2. The closing stock for the developer would be the developers allocation. Then the valuation of the developers allocation would be done considering the total construction cost/total constructed area or total construction cost/total developers allocation

CA. SUDHARSAN K G

CA. SUDHARSAN K G (Expert)
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05 December 2009 Dear Try To Understand the Following Entries.
In Accounting View You are Receiving the Constructed Area by giving the Land.

So in combined, The Entry Should,

Property.......A/c Dr.
To Land...A/c

Balance either Payable or Receivable should be accounted accordingly.