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CA Final · Financial Reporting · Ind AS 40 Investment Property

Mehta Developers Ltd bought a plot of land exclusively with a view to subsequent disposal in the near future, intending to resell it after obtaining approvals. How should the land be accounted for under Ind AS?

The land is inventory under Ind AS 2. Ind AS 40 excludes property intended for sale in the ordinary course of business, including property acquired exclusively with a view to subsequent disposal in the near future or for development and resale, so it is not investment property.

  1. AAs investment property because it is land held for capital appreciation
  2. BAs property, plant and equipment under Ind AS 16
  3. CAs inventory under Ind AS 2, as it is held for sale in the ordinary course or for development and resaleCorrect
  4. DAs investment property until a buyer is identified, then as inventory

Explanation

Paragraph 9(a) excludes property intended for sale in the ordinary course or being developed for such sale, giving the example of property acquired exclusively for disposal in the near future or for development and resale. This is covered by Ind AS 2. The capital appreciation argument fails because the intent is sale in the ordinary course.

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