Formulation of A/C Standards
Quick practice
Question 1 of 5
A limited has sold its building for Rs. 200 lakhs and the purchaser has paid the full price. The company has given possession to the purchaser. The book value of the building is Rs.140 lakhs.
As on 31st March 2021, the documentation and legal formalities are pending. The company has not recorded the sale. It has shown the amount received as advance.
What accounting treatment should the buyer give in its financial statements?
Both (a) and (b)
The buyer should disclose in his notes to account that possession has been received however documentation and legal formalities are pending
Do nothing
The buyer should recognize the building as an asset in his balance sheet and charge depreciation on it
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