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How to be accounted for a building that is build in a property that is not of the company?


The building was built in the property that is not prone of the company, i.e. there are no documents that prove the ownership of the property

asked Mar 20, 2014 in IAS 16 - Property, Plant and Equipment by anonymous

1 Answer

+1 vote
Is it a rented or leased land? Then you may have to recognize the building cost as a fixed asset and depreciate over the rent/lease period. If you have put up a building on someone else's land without any   such agreement, then it is illegal in the first place. In such case you may recognize the cost of building as an asset but you will have to seriously look for any indication of impairment . For instance if the legal owner has come up and asking you to leave, you may have to consider an impairment loss for the building cost you capitalized.
answered Mar 21, 2014 by anonymous


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