Accounts

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Kunal Bhutada (Querist)
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22 October 2012 ABC a partnership firm is engaged in business of builders & developers.Firm purchased a plot from mr X on the condition that they will pay him a cash of rs.9 Lacs & 1 flat in their scheme which they will build up on aforesaid plot..here question is at what amount entry for purchased of plot to be entered in books of ABC firm...?
a)at 9 lac
b)at 9 lac + cost of construction of flat
c)at sale price of flat

CA. Subhash Dangi

CA. Subhash Dangi (Expert)
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22 October 2012 As per prudent business practices and accounting policies, the sale price of flat is the price consideration for sale of flat.

However, as a specific case of purchasing plot from Mr.X who is the owner of property, the entry in books of accounts shall be as per the agreement between two parties.

In such case, sale price should be Rs.9 lakhs + agreed price of Flat as per agreement.

Kunal Bhutada

Kunal Bhutada (Querist)
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22 October 2012 thanks u sir...

But i m asking about entry in the books of purchaser of plot ie: ABC builders & developrs and at what amount ?

CA. Subhash Dangi

CA. Subhash Dangi (Expert)
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22 October 2012 Land or Plot Account -Dr xxx
To Mr. X Account xxx
(Being purchase of plot from Mr.X at agreed price as per the Joint Venture Development Agreement)

Kunal Bhutada

Kunal Bhutada (Querist)
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22 October 2012 In development agreement it is written that they will pay 9 lac and provide 1 flat.

then what is to be taken as cost of purchase??
a) 9 lacs only
b) 9 lacs + cost of construction of flat
c) 9 lacs + sale value of flat

CA. Subhash Dangi

CA. Subhash Dangi (Expert)
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22 October 2012 Generally at the time of purchase agreement the plot of land will be valued as per the agreement.
If it is not available then the amount registered in Revenue department at the time of transfer or sale deed of plot from Mr.X is the cost of purchase as per the Income tax Rules

Kunal Bhutada

Kunal Bhutada (Querist)
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22 October 2012 sir what will be the treatment in accounting?

cost of purchase for accounting purpose?

CA. Subhash Dangi

CA. Subhash Dangi (Expert)
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22 October 2012 Do you know the cost of Flat.
If U know,
then cost is 9lakhs + Cost of Flat.

Kunal Bhutada

Kunal Bhutada (Querist)
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22 October 2012 thank u sir...

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