The company is in the business of construction buildings and leasing them for use. Essentially, their revenue source is lease rent. Question is the material and furniture they purchase for construction of these buildings, which have not been used yet, should be recognised as inventory as per AS 2 or fixed asset as per AS 10 (Ind AS not applicable)? Thanks.
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Whether material to be used in construction of fixed asset to be grouped as inventory or fixed asset
Replies (5)
Inventory..
In my opinion to be recorded as Fixed asset
You group them under CIP (Construction in progress) and capitalize it once it is used in building as a Fixed asset if your business was other rather then construction. but since you main source of income and venture is construction of building it should be treated as Inventory.
| Originally posted by : Harsha Shetty | ||
 |
You group them under CIP (Construction in progress) and capitalize it once it is used in building as a Fixed asset if your business was other rather then construction. but since you main source of income and venture is construction of building it should be treated as Inventory. |  |
No the main and only source of income is LEASE RENT, not construction service or sale of building.
Investment property. Treat it as inventory.
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