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Property Value in BalanceSheet

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Siddharth Kishan Mane

Tax Consultant

298 Points Posted on 04 December 2020

The value of Residential Flat in BalanceSheet is value of Flat purchased in 1965. My client wants the Flat value as per current market price so the Balance Sheet will become heavyweight due to increased value of Asset and it will be good to get CC/OD from bank. No depreciation is shown for this Asset. Is it possible to put flat value in the BalanceSheet as per current price. Will this attract any Tax liability, pl advice guys.

Replies (2)

Quick Summary

A client wants to update the balance sheet with the current market value of a residential flat purchased in 1965 to improve borrowing capacity. However, accounting principles dictate that property value on a balance sheet should remain at its historical cost. Assets like buildings are also subject to depreciation, which reduces their book value over time. Showing the current market value is not permissible and could lead to tax liabilities.

ayusmita

Tax consultant

5895 Points Posted on 05 December 2020

No
even if the building market value increases over time its value on the balance sheet remain s always historical
and buildings are subject to depreciation or the periodic reduction of value in the assets that is expensed on the income statement and reduce net income.