Treatment of legal exps in respect of advance for land

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CA Minhaj Ansari (Querist)
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12 July 2013 I want to Know if Legal Exps incurred in respect of Advance for Land? wether such expenditure Capitalised or not?

& if Advance for land Cancelled in Next year what would be treatment in next year?

Kindly resolve my query?

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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12 July 2013 Pls define the type of legal ex incured.

Advance forefeited shall be deducted from cost of acqusition when asset is sold as per sec 51.

CA Minhaj Ansari

CA Minhaj Ansari (Querist)
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12 July 2013 suppose it's Lawyer's fees, wether it should be capitalised?

if cancelled in next year what would be treatment of same expenditure?

give adequate answer please?

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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12 July 2013 lawyers fees for professional work cant be capitalised.

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CA Minhaj Ansari

CA Minhaj Ansari (Querist)
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13 July 2013 Mr. Tushar can you give me refrence of any one Accounting Standard?

& if my Advance for Land completed into terms & conditions and converted into fixed assets what about Legal Expenses?

please reply in accuracy level?

Ganeshbabu K

Ganeshbabu K (Expert)
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13 July 2013 For Accounting purpose:-

1)If Land is a Fixed asset for us..As per accounting standard 10 issued by ICAI Fixed asset shall be shown in the financial statements either at Historical cost or revalued price.

And Any directly attributable cost of bringing asset to the present condition for intended use..
.
.
It includes any professional fee paid also..

So...with above accounting standard help

1)If you have paid lawyer fee in that financial year it can be capitalized to LAND.

2)If you have not paid to lawyer fee but only invoice received from him and also cancelled in subsequent year there is no meaning of capitalization of such expenditure in my opinion So

a)no need to pass any entry in this regard

b)if you have already passed any entry on this just pass the reverse entry so that lawer ledger account will be zero

Thanks & regards
Ganesh babu k

CA Minhaj Ansari

CA Minhaj Ansari (Querist)
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13 July 2013 MR. Ganesh can u tell me if lawyer fees capitalised & later on Land agreement cancelled in Next year?

can Legal exps reversal possible.

Thanks

Ganeshbabu K

Ganeshbabu K (Expert)
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13 July 2013 1)All irrecoverable expences capitalized previously to LAND can be reversed and taken back to profit and loss account

2)in my opinion we can capialise land only after ownership and control transfered to us.

Thanks & regards
Ganesh babu k

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