Cost of land

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A user is seeking advice on how to rectify an accounting error where land purchased in 2016 is recorded at a value lower than its actual cost. The discrepancy arose because the 'own contribution' portion of the purchase price wasn't properly debited to the land account at the time of purchase. The user needs to adjust the books in 2019-20 to reflect the correct value before the land was sold.

CA PARUL KHATANA

CA PARUL KHATANA (Querist)
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23 August 2020 Dear colleagues,
there was a land purchased in 2016. it was purchased out of loan and own contribution.
own contribution could not be debited to the land.
now in 2019, when it was sold, it was realised that land in books is at value lesser than purchase cost.
how can it be rectified in books of 2019-20?
plz reply soon

thanks

CA KARAN SINGH

CA KARAN SINGH (Expert)
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23 August 2020 Pass a journal Entry 01/04/2019 by debiting the Land and crediting the P&L Account with the amount of own contribution invested for purchase of Land.

CA PARUL KHATANA

CA PARUL KHATANA (Querist)
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24 August 2020 why should we credit the pl?

CA KARAN SINGH

CA KARAN SINGH (Expert)
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24 August 2020 How did you treat own contribution in 2016 ? Had you booked as revenue expenditure ?

CA PARUL KHATANA

CA PARUL KHATANA (Querist)
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24 August 2020 the entry for own contribution was missed in 2016

CA KARAN SINGH

CA KARAN SINGH (Expert)
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24 August 2020 How could you miss the entry ? Did you make payment in cash ???