Query.............................

CS. CMA. J.Rajganesh (Finance Professional) (383 Points)

06 August 2011  

For Eg:
If ABC Ltd., purchased a land on 01.01.2006 for 500000 and recorded in the Books as an (Land) Asset.

On 01.05.2009 It constructed a building on the land purchased on 01.01.2006 for 1500000.

In the Asset Side of The Balance Sheet :- Land 500000 & Building 1500000

Depreciation as per IT Act:
Depreciation Should not provided for Land.  Hence ABC Ltd. Can claim Dep. only on Building.

MY QUESTION IS.....

Question 1:

In case If ABC Ltd., purchased Building for 2000000 (Including Land) and recorded in the Books as Land & Building 2000000.

In this Situation... How to Calculate Depreciation Amount ?? Because the land value is included in the Building.


Question 2:
In the above Example

How to Calculate Capital Gains if ABC Ltd. sold the Building on 31.03.2011 for Rs.2500000??
Because In this Case Land is Long Term Capital Asset & Building is Short Term Capital Asset (Depreciable Asset u/s 50) ?

 

Thanks in Advance...................