1.11     Query

Whether to debit the Building Account with the cost of

land for the area covered by a building.

The querist sought the opinion of the Expert Advisory Committee whether in case of any building, the cost of land relating to ‘covered area only’, could be debited to the Building Account.

                                                                    Opinion                                                August 13, 1982

  The Committee is of the opinion that it will not be correct to debit the Buildings Account with the cost of land in respect of the covered area, in view of the generally accepted accounting principle that the cost of land on which a building is constructed, should not be included in the cost of building. The reason is that the nature of land as an asset is different than that of a building; land is a non-depreciable asset whereas a building is not so.

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