Dear all
We want to revalue our land currently its price is book is appox. 2 crore now we want to revalue it 3.50 crore please let me know the entry of revalue of land..
14 Replies
ANUP GUPTA
(KEEP SMILING fcaanupgupta@gmail.com)
(303 Points)
Replied 12 October 2011
Land a/c dr. 1.5 cr.
To revaluation res. 1.5cr
For supporting this entry u should also take valuation certificate from valuer that support value of ur land is rs. 3 cr.
priyatambika
( ca final student)
(323 Points)
Replied 12 October 2011
land a\c dr 1.5cr
to revaluation res a\c 1.5 cr
being revaluation of land
Swapnil Jain
(Finance - FP&A)
(564 Points)
Replied 12 October 2011
Land A/c ......Dr 1.5Cr
To Revaluation Reserve A/c 1.5cr
(Being upward revaulation in book value of Land)
Point to note:
- The increase in value of fixed assets because of revaluation of fixed assets is credited to ‘Revaluation Reserve’, and is not available for distribution as dividend. Revaluation Reserve is treated as a Capital Reserve.
- The increase in depreciation arising out of revaluation of fixed assets is debited to revaluation reserve and the normal depreciation to Profit and Loss account.
Poonam Arun Sharma
(student)
(103 Points)
Replied 12 October 2011
Land A/c Dr 1.5 cr
To Revaluation A/c 1.5 cr.
When Asset increase n liabilities decrease............. Revaluation A/c is credited ( good things)
When Asset decrease n liabilities increases............ Revaluation A/c is debited (bad things)
mayank agarwal
(CA fianlist BCOM(H) CS student )
(577 Points)
Replied 13 October 2011
| Originally posted by : Swapnil Jain | ||
 |
Land A/c ......Dr 1.5Cr To Revaluation Reserve A/c 1.5cr (Being upward revaulation in book value of Land) Point to note: The increase in value of fixed assets because of revaluation of fixed assets is credited to ‘Revaluation Reserve’, and is not available for distribution as dividend. Revaluation Reserve is treated as a Capital Reserve. The increase in depreciation arising out of revaluation of fixed assets is debited to revaluation reserve and the normal depreciation to Profit and Loss account. |
 |
Pankaj Arora
(Learner)
(3134 Points)
Replied 13 October 2011
Thank you so much guys for your valuable reply.. pls let me know one more thing that after revaluation of land. On which amount we have to pay capital gain tax. Is 3 crore amount after revaluation of land will be our cost of acquisition and suppose its building instead of land than should we have to charge depreciation on whole amount after revaluation of land?
Prashanth
(Chartered Accountant)
(2322 Points)
Replied 13 October 2011
@ all May i know according to which Accouting standard this revaluation can be done?
banke bihari jha
(artilcle clerk)
(81 Points)
Replied 13 October 2011
as per section 54 the acqusation cost of land will be the purcashe price of land ,if it acuqired on before 1981 then fair market value,so you can not take the cost of land of upwared value , becasue when you will calculate the capital gain you will take the benifit of cost of inflation index.
as you posted regard the upward value of machinery it's value is appreciated only when there is change in depreciaton method,change in esimation life of assests etc.so you can charge the depreciaton on upward value of assests. in this case the cost of machinery will be w.d.v of previous year of machine.
SAMIR SALVI
(FINANCE)
(29 Points)
Replied 13 October 2011
Land A/c ......Dr 1.5Cr
To Revaluation Reserve A/c 1.5cr
For audit purpose you can take valuation certificate from valuer that support value of your land is Rs. 3.50 crore. (it must required at the time of Income tax assessment).
Z
( )
(2965 Points)
Replied 13 October 2011
Depriciation is not charged on land
If its building then make sure that for the purpose of charging depriciation, cost of land and building are segregated and depriciation is charged only on building (again you can't charge depriciation on land)
If you are also revaluating the building and there is increase in value of building then following entries may be considered
land
to revaluation (for enhanced value of land)
Building A/c
to revaluation reserve (enhanced value)
dep
to building
P&L
to dep (normal )
revaluation reserve
to depriciation ( dep. on enhanced value only)
Capital gain tax will be attracted if all the assets in the block are sold and fair value consideration is more than WDV of asset
[as per sec 43(6) WDV of Block of asset is arrived by]
o/p value of block at the begining of the p/y
add actual cost
less money payable
_______________
WDV for the purpose of dep.
(revalued part has not been taken into consideration)
in case of land or land only
Capital gain tax will be attracted if all the assets in the block are sold and fair value consideration is more than ICOA/COA ,expense on t/f,ICOI/COI and exemptions taken together , of asset
[second proviso to sec 48 / sec 48]
Full value consideration
less expense on t/f
less ICOA/COA
less ICOI/COI
LTCG/STCG
less exemptions under various sections
(when Income tax act is giving you the benefit of indexation , then why should they give you the benefit of revaluation? Indexation is arrived by computing the increase in value )
Pankaj Arora
(Learner)
(3134 Points)
Replied 13 October 2011
your means to say that if its building and we revalue it than we can also claim depreciation on revalue of building amount i.e. 3 crore.
and also let me know how to sett off revaluation reserve in balance sheet?
Z
( )
(2965 Points)
Replied 13 October 2011
@ Prashant
<quote>Guidance Note on Treatment of Reserve Created on Revaluation of Fixed Assets
|
|
||
|
</quote>
source:https://www.icai.org/post.html?post_id=1409
Revaluation reserve A/c dr.
to dep
(this entry will be for the books of accounts , not for income tax purpose )
for income tax , in my opinion
sec 43(6) and sec 48 / second proviso to sec 48 are applicable ,where you do not get the benefit of revaluation
Recent Topics
- Nznxnc call me at the end of the day of the
- Cp chod doob zoom vo book book
- Nsje snswk fjw ed le ene djff ne enje ejdd rejje
- Hxjcif the day I have been in touch with me and
- Iska djd djrbdsjebshe sir ur rei ejr reinr the jr
- GST registration for medical shop in Karnataka
- Hsshs me know if you are free number of the
- Chu Kang and the situation of the situation and I
- How to reverse wrong transaction payment in phonep
- Paytm wrong transaction
Related Threads
CAclubindia
