I have carrying a construction/reality industry. There i purchase land for developing purpose. how can i treat this land on my books of account, asset or stock ?
SHYAM KRISHNAN K (i) (220 Points)
29 November 2021I have carrying a construction/reality industry. There i purchase land for developing purpose. how can i treat this land on my books of account, asset or stock ?
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 29 November 2021
treat it as asset if your planning to rent it or lease it. treat it as inventory, if your selling it back to customer base.
SHYAM KRISHNAN K
(i)
(220 Points)
Replied 29 November 2021
We have plan to sell it customers. But mistakenly we have treated as asset. Is it possible to convert it as inventory now.
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 30 November 2021
Yes it is possible, derecognition is simple
Inventory a/c
To Fixed Asset a/c
SHYAM KRISHNAN K
(i)
(220 Points)
Replied 30 November 2021
Is there any capital gain attracted on this convertion if the same was taken place over few year leter.
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 30 November 2021
This falls under revenue recognition. No chance of capital gains arising. Remember, your selling land and development. Sales tax is applicable. Capital gains is for asset sale.
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