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Treatment of land purchased

Aj Style (Student) (337 Points)

25 July 2019

I have started a construction business and have purchased land worth 50 lakhs and now I have started the construction of house on that land. Now my question is that land should be treated as Asset or inventory because I have to sell the house after completion and the construction will take 15 months to complete let's assume.

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CA PREM KUMAR (Chunduru & Co) (296 Points)
Replied 25 July 2019

for the persons who are into the business of property developments, land will be considered as only inventory and it all the construction works will be shown as work in progress till you receive completion certificate or occupancy certificate from the local authority/.

regards

prem

9884343669

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Aj Style (Student) (337 Points)
Replied 25 July 2019

thank u sir, now sir I have one more question if I received some advance from customer such as booking amount or any kind of advance, would it be treated as income or liability?