Reclassifying land from Property, Plant, and Equipment (PPE) to stock-in-trade involves important accounting and tax considerations. Hereโs a professional overview of the key aspects to ensure compliance and accuracy:
๐๐๐ฒ ๐๐ข๐ ๐ก๐ฅ๐ข๐ ๐ก๐ญ๐ฌ:
โฃ ๐๐๐๐ฅ๐๐ฌ๐ฌ๐ข๐๐ข๐๐๐ญ๐ข๐จ๐ง ๐๐ง๐๐๐ซ ๐๐ ๐๐ โ When a company transitions into real estate development, land previously classified as PPE must be reclassified to stock-in-trade. As per AS 10, this reclassification should be done at the carrying amount of the land
โฃ ๐๐๐ฑ ๐๐ฆ๐ฉ๐ฅ๐ข๐๐๐ญ๐ข๐จ๐ง๐ฌ ๐๐ง๐๐๐ซ ๐๐๐๐ญ๐ข๐จ๐ง ๐๐(๐) โ Land conversion into stock-in-trade is treated as a transfer under the Income Tax Act. This may result in a taxable gain based on the Fair Market Value (FMV) of the land at the date of conversion
โฃ ๐๐๐๐๐ซ๐ซ๐๐ ๐๐๐ฑ ๐๐ฌ๐ฌ๐๐ญ (๐๐๐) ๐๐ง๐๐๐ซ ๐๐ ๐๐ โ Timing differences between the carrying amount and the tax base of the reclassified land necessitate recognizing a Deferred Tax Asset. However, this recognition is subject to the availability of sufficient future taxable income to utilize the DTA
For a detailed explanation of the provisions and accounting treatment, visit: taxmann.social/yades ๐๐ฉ๐ช๐ด ๐ค๐ฐ๐ฏ๐ต๐ฆ๐ฏ๐ต ๐ช๐ด ๐ฃ๐ณ๐ฐ๐ถ๐จ๐ฉ๐ต ๐ต๐ฐ ๐บ๐ฐ๐ถ ๐ฃ๐บ ๐ต๐ฉ๐ฆ ๐ฏ๐ฆ๐ธ๐ญ๐บ ๐ญ๐ข๐ถ๐ฏ๐ค๐ฉ๐ฆ๐ฅ ๐๐ข๐น๐ฎ๐ข๐ฏ๐ฏ.๐ค๐ฐ๐ฎ | ๐๐ณ๐ข๐ค๐ต๐ช๐ค๐ฆ
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Reclassifying land from Property, Plant, and Equipment (PPE) to stock-in-trade involves important accounting and tax considerations. Hereโs a professional overview of the key aspects to ensure compliance and accuracy:
๐๐๐ฒ ๐๐ข๐ ๐ก๐ฅ๐ข๐ ๐ก๐ญ๐ฌ:
โฃ ๐๐๐๐ฅ๐๐ฌ๐ฌ๐ข๐๐ข๐๐๐ญ๐ข๐จ๐ง ๐๐ง๐๐๐ซ ๐๐ ๐๐ โ When a company transitions into real estate development, land previously classified as PPE must be reclassified to stock-in-trade. As per AS 10, this reclassification should be done at the carrying amount of the land
โฃ ๐๐๐ฑ ๐๐ฆ๐ฉ๐ฅ๐ข๐๐๐ญ๐ข๐จ๐ง๐ฌ ๐๐ง๐๐๐ซ ๐๐๐๐ญ๐ข๐จ๐ง ๐๐(๐) โ Land conversion into stock-in-trade is treated as a transfer under the Income Tax Act. This may result in a taxable gain based on the Fair Market Value (FMV) of the land at the date of conversion
โฃ ๐๐๐๐๐ซ๐ซ๐๐ ๐๐๐ฑ ๐๐ฌ๐ฌ๐๐ญ (๐๐๐) ๐๐ง๐๐๐ซ ๐๐ ๐๐ โ Timing differences between the carrying amount and the tax base of the reclassified land necessitate recognizing a Deferred Tax Asset. However, this recognition is subject to the availability of sufficient future taxable income to utilize the DTA
For a detailed explanation of the provisions and accounting treatment, visit: taxmann.social/yades
๐๐ฉ๐ช๐ด ๐ค๐ฐ๐ฏ๐ต๐ฆ๐ฏ๐ต ๐ช๐ด ๐ฃ๐ณ๐ฐ๐ถ๐จ๐ฉ๐ต ๐ต๐ฐ ๐บ๐ฐ๐ถ ๐ฃ๐บ ๐ต๐ฉ๐ฆ ๐ฏ๐ฆ๐ธ๐ญ๐บ ๐ญ๐ข๐ถ๐ฏ๐ค๐ฉ๐ฆ๐ฅ ๐๐ข๐น๐ฎ๐ข๐ฏ๐ฏ.๐ค๐ฐ๐ฎ | ๐๐ณ๐ข๐ค๐ต๐ช๐ค๐ฆ
#TaxmannUpdates #AccountingTreatment #AS10 #AS22 #DeferredTax #PPE #RealEstate
18 hours ago | [YT] | 2