Please tell me under which schedule/ head i should put "cost of construction of flats/plots" for balance sheet purpose as per revised schedule VI?
11 Replies
CA. Subhash Dangi
(Chartered Accountant)
(1784 Points)
Replied 24 August 2012
Till the completion of construction of Flats/plots, it should be shown as Capital Work-in Progress under Non-Currents Assets.
If it is fully completed same can be shown as Building under Tangible Assets.
However, in case of Construction company or Real Estate company, the treatment will differ. The fully constructued cost of flats/plots will be treated as Inventories under Current Assets as per the Company policies.
NIKITA
(CA FINAL, CS)
(111 Points)
Replied 24 August 2012
its a real estate company where flats are not fully constructed. what it should be in this case
CA. Subhash Dangi
(Chartered Accountant)
(1784 Points)
Replied 24 August 2012
Captial Work in Progress under Non- Current Assets
Saurabh Maheshwari
(B.com,ACA)
(5923 Points)
Replied 24 August 2012
@ subhash sir, in case of real estate developer co why partly constructed flat not shown as work-in-progress , because you told that fully constructed flat to be shown as inventory?
praveen
(Chartered Accountant)
(6971 Points)
Replied 24 August 2012
Hi friends.
There is a provision for showing changes in the inventory. Just show your figures there.
Regards
Sanjay Suresh
(Student)
(98 Points)
Replied 24 August 2012
it depends whether the building is under construction or has bin fully constructed.. if its a fully constructed building then it comes under fixed assets, if its nt yet finishd then it comes under capital work in progress. and i dont know if i'm right, but i personally think that building comes under fixed asset right?? it cannot be classified as an inventory
Niraj Shaw
(ARTICLE)
(89 Points)
Replied 25 August 2012
In the earlier schedule VI current liabilities were deducted from Current Assets. But now it comes under the liability side. And I think it would be helpfull for the new comer to get it very easily. Becaue if there is a separate liability side than why should we deduct it from assets....
Atul Kumar
(working employee)
(153 Points)
Replied 25 August 2012
Dear Suresh you are right but for real Estate Company making of Flats/constructoin is its Inventory. that why they should show as inventory under under non Currrent Assests and
if land is not own then it should be show as non current liabilites.
rectify me if i am wrong
Sumit
(CA Final)
(26 Points)
Replied 26 August 2012
It is Inventory (work in progress).
As far as classification is concerned...
Point 1(b) of "General Instructions for Preparation of Balance Sheet" (Revised Schedule) says that "an asset shall be classified as current if it is held primarily for the purpose of being traded".
It means Inventories shall always be classified as Current Asset. It should not be classified on the basis of expected realisation period.
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