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
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.
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