Gurpreet purchased 1,000 sq . Yards land to build a factory and pain Rs. 15 lakhs towards its cost including registration charges . At the end of the financial year , the value of the land came down to Rs.13 lakhs . Gurpreet recorded the land at Rs. 13 lakhsand booked a loss of Rs. 2 lakhs . Is he correct in treating the fall in value as a loss ?

Gurpreet purchased 1,000 sq . Yards land to build a factory and pain R

1.	Gurpreet purchased 1,000 sq . Yards land to build a factory and pain Rs. 15 lakhs towards its cost including registration charges . At the end of the financial year , the value of the land came down to Rs.13 lakhs . Gurpreet recorded the land at Rs. 13 lakhsand booked a loss of Rs. 2 lakhs . Is he correct in treating the fall in value as a loss ?
Answer» SOLUTION :No, Gurpreet is not correct because he has purchased a fixed ASSET by paying Rs.15 lakhs.The cost Concept of ACCOUNTING holds that an asset should be recorded in the BOOKS ATTHE price paid.

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