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Capitalization

shanavas.M.K (CA Aspirant) (129 Points)

21 April 2009

Land Purchased , How to be capitalized?

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6 Replies

Nitesh (service) (136 Points)
Replied 21 April 2009

Land a/c Dr

To Bank

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NANDURI RAVI SURYA NARAYANA MU (ACCOUNTANT) (194 Points)
Replied 21 April 2009

Hi Shanavas

I agree entry of Nitesh only. Land capitalisation entry before it needs so many things. I will explain.

1) First of all you must add the all preliminary expenses to the Land. (i.e. Land brokerage, Land registration charges, irrespective of all the charges to add the value of sale deed of your land.)

2) After that it must be certified by the authenticated valuer recongised by your local government autherites.

on basis of that you make entry. This is procedure for land capitalisation entry.

Nagaraju.K (Audit Assistant) (22 Points)
Replied 22 April 2009

Hi Narayan Murthy Sir,

In the second point after the certified by the authenticated valuer the value is slightely comes down what would we take necessary steps for accounting

NANDURI RAVI SURYA NARAYANA MU (ACCOUNTANT) (194 Points)
Replied 22 April 2009

Originally posted by :Nagaraju.K
"	Hi Narayan Murthy Sir, In the second point after the certified by the authenticated valuer the value is slightely comes down what would we take necessary steps for accounting	"

Hi, Nagaraju,

If you buy land in the india, The Government of India having one policy according to the they fix market rates to land as per the city and historical backround of the place. So according to that registar will register the doucment.

On that basis only the valuer valuation the rate. Valuer verify value is market rate or other rate according to that valuer certifies.

In this case you buy for land more value of the Market Price, You made alternater arrangements in your books of accounts.