If a company purchase a land along with

company purchase a land along with property tax pending of 5 yrs so how do you account for it ??
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Quick Summary
When a company buys land with outstanding property tax from previous years, the pending tax should be treated as part of the land's acquisition cost. According to ICAI guidelines, all costs incidental to acquiring land are capitalised as a fixed asset. This means debiting the Land account and crediting both the Tax Liability and potentially a Bank or Sundry Creditor account for the payment.

Add property tax paid in cost of plot.
As per icai guidelines all costs incidental with the land is to be capitalized for fixed asset.

Dr. Land

Dr. Tax capitalised

Cr. Tax liability

The entry is .

fixed assets dr.
input c gst Dr.
input sgst Dr.
sundry creditor cr.

rates and taxes Dr.
Tax liability cr.
tax liability Dr.
cr. Bank
fixed asset Dr.
rates and taxes cr.

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