Alnd Development Expenses

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 June 2010 Whether land development cost , like filling of sand and soil in the land , is to be capitalised or to be written off completely in the same year ?
Further will it make any difference if development work has been done along with the purchase of the land or subsequent to its acquisition ?

Please clarrify my doubt with good supportings. Thanks/Regards

CA Ravi Kumar Murugesh

CA Ravi Kumar Murugesh (Expert)
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10 June 2010 As per AS-10, Only expenditure that increases the future benefits from the
existing asset beyond its previously assessed standard of performance is
included in the gross book value, e.g., an increase in capacity.
The cost of an addition or extension to an existing asset which is of a
capital nature and which becomes an integral part of the existing asset is
usually added to its gross book value. Any addition or extension, which has a
separate identity and is capable of being used after the existing asset is
disposed of, is accounted for separately.

Hence, land development cost either at the time of initial purchase or later on should be capitalised.

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