purchase of land for a construction Company

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What will be the treatment for land purchased in a construction company.

Land purchased but construction yet to be started.

Should it be treated as fixed asset ?

Replies (6)

LAND  WILL BE TREATED AS STOCK IN HAND

I AGREE 

yes it will be treated as stock in trade

HI DEAR,

 

SINCE THE NORMAL COURSE OF BUSINESS OF  COMPANY IS CONSTRUCTION OF COMPEX/ HOUSE/ BUILDINGS. IT IS JUST LIKE AS MANUFACTURING CO. PRODUCING PRODUCTS. A MANUFACTURING CO. CLASSIFIED ALL THE RAW MATERIALS USED AS A STOCK. A CONSTRUCTION CO. IS NOT A DIFFERENT FROM THIS, LIKE A MANUFACTURING CONCERN, LAND IS A RAW MATERIAL FOR CONSTRUCTION CO. BECAUSE OF WHICH CONSTRUCTION SHOULD NOT BE COMMENCED. THUS LAND IS AN INTEGRAL PART FOR CONTRUCTION OF BUILDING/ COMPLEX/ HOUSES. AND THUS THIS NEEDS TO BE CLASSIFIED AS STOCK FOR A CONSTRUCTION CO.

 

REGARDS,

 

MANOJ

I agree 

But what happens when the prospective purchasers are not identified and appropriation is not done, and it is not known whether he is going to retain the building or sell?

How can you be sure that he is going to sell the commodity, if in the past he has retained a part of the constructed property?

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