As-10 capitalisation of land & building

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SAI CHANDU B (Querist)
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09 February 2013 A Company purchased a land together with building for a consideration (say Rs.1 crore).
No separate value allotted to Land & Building in the Sale deed.

How to allocate the cost between land & building for capitalisation in the books of accounts as per AS-10?

CA Rinkal

CA Rinkal (Expert)
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09 February 2013 when you purchase land and building separately then only you can allocate their cost separately.

in this situation both will consider as one asset and shown their cost as 1 crore in the balance sheet on asset side.

SAI CHANDU B

SAI CHANDU B (Querist)
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09 February 2013 Under what head I should capitalise?

SAI CHANDU B

SAI CHANDU B (Querist)
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09 February 2013 I want to capitalise land & building separately and claim depreciation on building portion.

CA.Sourabh Sethia

CA.Sourabh Sethia (Expert)
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11 February 2013 you cannot allocate because you cannot separate the building from the Land
and the same is also beneficial for you because you can claim depreciation on that value.

SAI CHANDU B

SAI CHANDU B (Querist)
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11 February 2013 I don't think it is possible to claim depreciation on the entire amount. You have to classify it.

As per Accounting Standard-10, if several assets are purchased for a consolidated price, assets should be accounted at FAIR MARKET VALUE as determined by competent VALUER.

So, the value can be split between land & building.

CA.Sourabh Sethia

CA.Sourabh Sethia (Expert)
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13 February 2013 but the building on land is a single asset

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