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.


Discussion

No Comment Found

Related InterviewSolutions