Account classification

If the office belong to the Director and he had willingly given it to the company for use then here the original owner of the property is the director, it will be inappropriate to take such property in the books of the company.

There are other matter that you should verify, whether there is any Rent Agreement entered between Director to rent the office to the Company.

If u have any further query feel free to ask

Dear sir, I would like to clarify that the company has four directors. The office is owned by one of the directors. And that director has another buisness which was running in the same office five years ago. And the equipment(fans ac chairs are installed in it). So kindly tell me a way for the evaluation of the building as there has been some naintenance cost incureed on the equipmeng office. The office is owned by the director not rented.

First of all you would have know about the terms & conditions agreed upon by the Director Owning Office & the Company.

There could be following possibilities

1st Possibility

If the director has given the place for free to the company to use as its office then No entry in the books of the Company.

 

2nd Possibility

If the director has given the office for shares (Capital) in the company, then this results in non cash transaction and the office and all assets should be booked in the Books of Accounts of the Company at

• Fair Value of the Assets taken up. OR
• Amount of Shares issued to the Director

Whichever is more clearly evident.

 

3rd Possibility

The Director has given up his office to company to use as its place of business for some consideration i.e.

• they have dicided that the company will pay fixed amount monthly to director, or
• would pay certain percentage of profit or
• Compensate the Director by any other way mutually agreed upon between

In this situation Asset would not be booked in the Books of Accounts of the Company, and the payment  made would be booked as expense.

 

If there is still any doubt feel free to Ask

Saliq Ansari

Thank You Sir

And Sir the other director uses its car for official purpose. So the Petrol charges and toll tax charges will be managed through which account.

Right now the director is using the car for the time being as the company does not owns the official Purpose

And in the above Question how to manage the repairing of instrument insatlled in the office