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| 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 lakhs and booked a loss of Rs. 2 lakhs . Is he correct in treating the fall in value as a loss ? |
| Answer» 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 at the price paid. | |