09 April 2010
On 1st March, Kripalu Ltd purchased Rs.5 Lakhs worth of land for a Factory Site. The Company demolished an old building on the property and sold the material for Rs.10,000. The Company incurred additional cost & realized salvaged proceeds during March as follows: Legal Fees for purchase contract and recording ownership Rs.25,000 Title Guarantee Insurance Rs.10,000 Cost for Demolition of Building Rs.50,000 Compute the balance to be shown in the Land Account on 31st March Balance Sheet.
09 April 2010
The amount to be recorded in Land Account is the cost incurred for making the asset ready to use. So the amount will be > Cost of Purchases - 5,00,000 Legal Fees - 25,000 Guarantee Insurance - 10,000 Cost Of dem of Bldg. - 50,000 Less. Cost of Salvage- (10,000) Total - 5,75,000
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