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    Question

    A company purchases land for ₹50 lakh and incurs ₹10

    lakh on its development. What should be the accounting treatment for development expenses?
    A Charged to P&L immediately Correct Answer Incorrect Answer
    B Treated as prepaid expense Correct Answer Incorrect Answer
    C Capitalised as part of land cost Correct Answer Incorrect Answer
    D Deferred revenue expenditure Correct Answer Incorrect Answer
    E Not recorded at all Correct Answer Incorrect Answer

    Solution

    Development cost directly attributable to the acquisition of land should be capitalised along with the cost of land under AS 10 / Ind AS 16 (PPE).

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