Accounting Treatment

DEAR SATISH,

THE LAND SHOULD BE SHOWN AT THE MARKET VALUE TO STATE THE CORRECT POSITION OF THE BALANCE SHEET.

FOLLOWING IS THE JV TO BE PASSED TO GIVE THE EFFECT IN THE BALANCE SHEET :-

LAND A/C   DR.     1000000 

     TO  GIFT A/C                      1000000

(BEING LAND RECEIVED AS GIFT)

REGARDS,

DEVENDRA KULKARNI

K Gift A/c has to be Grouped Under which Group?

Thanks

R Shriram

GIFT IS TO BE GROUPED UNDER INDIRECT INCOMES.

REGARDS,

DEVENDRA

Thanks Devendra.......

R Shriram

Dear Devandra,

I dont think it is shown be under Gift account  and showing the market value as it  GIFT (without consideration)  and more over it is not at all a income for the enterprise. if  land is debited, land is brought in, & hw where is d corresponding liability created.......?????!!!

Originally posted by : satish r
	A enterprise receives a land as a gift . What is the accounting treatment in the books of a Business enterprise.??? And what is amount/value shown under the books. of enterprise ???

even as gift the land has to get transferred by registration instrument, and the price adopted by registrar as fair value would be considered as gift value. 

an enterprise is not a person, so the gift would be passed through P/L account

however u can capirtalize it direct but u have to take back it again at computation sheet for addition of gift tax. 

1.) Land A/c Dr

                To Donor A/c

[with the amount of fair value as decided by registrar+registry charges(if paid by donor)]

2.) Land A/c Dr

                  To Registry charges A/c

(if registry charges paid by donee)

3.) Registry charges A/c Dr

                             To bank/cash A/c

(if Registry Charges paid by donee)

4.) Donor A/c Dr

                    To Gift A/c

Note:-

Donor A/c is created under the head Sundry Creditors.

Gift A/c is created under the head Indirect income.

But sumit how will be write off donor a/c from creditors because it will stand there in creditors.. 

Land accounts naturally debited as Assets Comes in & Credit to Capital account/Reserve & Surplus accounts directly.

Land accounts naturally debited as Assets Comes in & Credit to Capital account/Reserve & Surplus accounts directly.

Check again my entries..Donor a/c will not stand..

How can u directly credit Reserves & surplus A/c??

That Gift value is indirect income of that year & will be taxed..And must come in P & L A/c and thereafter Net profit of that year will be transferred to Reserves & surplus A/c..