22 October 2012
ABC a partnership firm is engaged in business of builders & developers.Firm purchased a plot from mr X on the condition that they will pay him a cash of rs.9 Lacs & 1 flat in their scheme which they will build up on aforesaid plot..here question is at what amount entry for purchased of plot to be entered in books of ABC firm...? a)at 9 lac b)at 9 lac + cost of construction of flat c)at sale price of flat
22 October 2012
As per prudent business practices and accounting policies, the sale price of flat is the price consideration for sale of flat.
However, as a specific case of purchasing plot from Mr.X who is the owner of property, the entry in books of accounts shall be as per the agreement between two parties.
In such case, sale price should be Rs.9 lakhs + agreed price of Flat as per agreement.
22 October 2012
Land or Plot Account -Dr xxx To Mr. X Account xxx (Being purchase of plot from Mr.X at agreed price as per the Joint Venture Development Agreement)
22 October 2012
Generally at the time of purchase agreement the plot of land will be valued as per the agreement. If it is not available then the amount registered in Revenue department at the time of transfer or sale deed of plot from Mr.X is the cost of purchase as per the Income tax Rules
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