k ltd purchased 50 lakh worth of land for a factory site . the co. demolished an old building on the property and sold the material for 1 lakh the co. incurred additional cost & realized salvaged proceeds during March as follows:
legal fees for purchase contract and recording ownerships 2,50,000
title guarantee insurance 1,00,000
cost for demolition of building 5,00,000
compute the balance to be shown in the land account on 31 march balance sheet .
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Property, plant and equipment querry
Replies (2)
New Land property Asset side with Rs.50,00,000
Profit or loss on sale of old land property Total cost of old land +all expenses on demolition - sale of old land = Profit (postive figure) Loss ( negative figure )
This profit or loss comes under profit / loss account but not balance sheet.
50+2.5= PPE capitalised
5 lakhs= expenses, bank credited
1 lakh= salvage gain, bank debited
1 lakh= insurance asset, bank credited
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