Fixed asset or investment????

1536 views 6 replies

Sharad Saini

Student

286 Points Joined May 2010

hiiiii

A real estate developer constructed a mall.

Some of the shops in the mall, he has sold while some are given on rent/lease to others. Lease agreement are not finance lease in nature.

Q.1 : How the accounting for shops sold should be made. (Plz explain giving entries)

Q.2 : How should the shops given on rent/ lease shold be presented in Balance sheet. Whether these are Investment Property as per AS-13 (as held for earning income by way of rent ) or Fixed Assets As per AS-19????

Plzzz reply..... its urgent....

Replies (6)

student

WORKING

757 Points Joined April 2007

whether u've entered into a lease agreement or simple rent agreement

kalyan

Manager - Accounts

104 Points Joined May 2009

Treat it as investment property under AS 13.

Dheeraj

Learner

1100 Points Joined February 2009

as per my opinion

ans 1 :- bank dr. and shops cr.

ans 2:- AS 13

manoj tiwari

officer

21 Points Joined June 2010

The accounting treatment will be follows:

First u have to calculate the total area on which mall has been constructed

Then calculate the cost of land + construction cost on the basis of total covered square feet area.

Then calculate the area which has been given on rent and which has been sold

The assets given on rent will be shown in investment/fixed assets and rent recived on revenue side.

And assets sold will shown in revenue side and proportionate cost of shop sold be shown in the expenses side.

I hope this will clarify your query.