Let me know about the entry to be passed and the effect of the transaction as given:
One flat is purchased in the underconstruction builidng which will be completed in next 3 years but advance to be paid from the 1st year i.e. on the date of purchase so how can i show it in financial and the effect of it.
15 March 2009
You have to Pass the enrty by debiting the "Advance for Flat/Building A/c" upto 3 yrs, this A/c is temporary A/c which will eliminated after getting posesssion of Flat/Buidling once Flat/Building is completed and you will get posession then Debit The "Flat/Building A/c" and credit the "Advance for Flat/Building A/c"
15 March 2009
The temporary A/c will come under Advances and Deposit which is open under current Asset and after getting possession it will come under Fixed Assets However if the nature of business is bying and Selling such properties then after getting possession it will come under Investment
CAclubindia
