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Treatment of land purchased
I have started a construction business and have purchased land worth 50 lakhs and now I have started the construction of house on that land. Now my question is that land should be treated as Asset or inventory because I have to sell the house after completion and the construction will take 15 months to complete let's assume.
Replies (4)
for the persons who are into the business of property developments, land will be considered as only inventory and it all the construction works will be shown as work in progress till you receive completion certificate or occupancy certificate from the local authority/.
regards
prem
9884343669
thank u sir, now sir I have one more question if I received some advance from customer such as booking amount or any kind of advance, would it be treated as income or liability?
booking amount will be shown as advance in books and GST payable based on the advance amount / progress bill issued to client.
income to be recognized based on project construction cost completion method.
you can refer to annual reports of big builders like raheja, lodha etc.,
regards
prem
9884343669
thank u sir
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