Capitalization of standing crops with land

Mohanty N (26 Points)

03 October 2016  

Dear Valued Professionals,

Please guide me with regards to Capitalisation of land acquired for setting of plant.

We have acquired the land with value Rs.5,00,000/- paid vide cheques to the owner of the land. The same cost also appearing in the agreement. However, the party again demanded Rs.1,00,000/- towards standing crops on the respective land and again the same was paid by the company in cheque to the owner of the said land. The Rs.1,00,000/- extra payment was not appeared in the land agreement however we have issued the cheque in the name of the land owner only.

Kindly advice whether we can capitalized the compensation paid for standing crops with the cost of land.

Thanking you