Sample Flat Cost

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Hi Friends,

My client works in a real estate business. His practice is to add the cost of sample flat in cost of project. The sample flat will be demolished after completion of project and in that area club area will be build up for residents residing there. I want to know whether that cost is a part of cost of project or it will affect the profit and loss account of client. Please explain the treatment thereof or any guidelines issued by institute??

 

 

Thanks

Replies (4)

Dear Radhika,

As such, the sample flat is meant for the specific project ie., for giving buyers of the flat an overall idea about kind of construction and other amenities, which are surely project specific.

Hence, the same may be included in specific project cost.

Other views are welcome :-)

iam very much agree with Ms. Shilpa the sample flat is specially bulid for the Particular project and it also abolish after project it also confirms that it can not use for any other purpose so it must be charged to the project

if some one hav some contrary view let me know

Thanks both of you. But i have one more querry

what about the cost of air conditioner and other equipments which will either be reused or used in some other project by the company..... Moreover if the company builds club there then it will recover the cost of land in maintenance cost of club as well as in the cost of flat .........

yes i agree with above views,

sample flat cost is project cost excluding the cost of  assets which are reused but the proportionate depreciation is project cost


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