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Land purchase by construction co.

Ritesh khurana (CA student) (175 Points)

09 November 2011

Hello

what is the treatment of agriculture land purchase by construction company on which construction is not permitted by state government for next 5 years.

As Stock or As investment

Kindly guide ASAP.

Thanks and regards

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1 Replies

Phalgun (Audit Manager) (327 Points)
Replied 10 November 2011

This is a gud query. For a construction company Land is like any other gud brought, constructed & sold. As per my understanding to AS-2 it can be treated as stock in trade. As it is purchased for sale in the ordinary course of business. It cannot be treated as investment under AS -13 as the objective of a construction company would not to procure land for capital appreciation purposes.