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Jagadees (Querist)
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25 July 2007 A company transfered land from FA to CA @ market price and adjusted the excess value under capital reserve instead of revaluation reserve. In subsiquent year the value was w/d gradually with declining market value. Whether this would constitute unusual accounting? AS 10

Shashi Mohan Jha

Shashi Mohan Jha (Expert)
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25 July 2007 Transfering of FA to CA @ market price in what circumstance..?? become an assets for sale

CA Mani

CA Mani (Expert)
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25 July 2007 When A capital asset is converted into current asset, Difference should be posted to Capital reserve.(But not revaluation reserve)

once the FA is converted into CA, AS 10's role will end and AS 2 will come into force.

It should be valued at Cost or NRV whichever is lower.

So, Company's treatment is correct, If they follow the abovesaid principle.

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