Our Company is in to the business of Property development and Leasing My query is that
Our company got Land under 99 Yrs of Lease for the Development we have started Constructing Factory for our sister concern at that land and we were showing all expenses for construction of Building Under Current Assets as Building Under Constrcution WIP after the completion of Construction of Factory we have transferred all expenses to Factory Building under Fixed Assets from Current Asset is Capital Gain is applicable for the same transfer
24 June 2008
First of all classifying a BUILDING WORK IN PROGRESS as a current asset is wrong... it is a CAPITAL ASSET ONLY... it must have been shwon under Fixed assets even though it is a WIP.
It is a self constructed asset... .so the cost of construction should be taken as the cost of building (Accounting Standard 10)
therefore......then one more thing... there is no chance of CAPITAL GAIN......
If Suppose the Building is under construction and it is shown under Fixed Asset as Building Under Construction Can we claim depreciation on Building Under Construction or We have to Calculate depreciation after receiving the Completion certificate from Architect
24 June 2008
Building under construction is an capital asset of the company. Therefore, classified as fixed assets as WIP. The depreciation for the said assets is only after the building is completed.
The capital gain to the company arises, when the property is sold.
CAclubindia
