Cropex Ltd. has the following property but is unsure about how to account for the same: A Tennant House has costed ₹15,00,000 to the company five…

CA Intermediate · Advanced Accounting · RTP · September 2026
Cropex Ltd. has the following property but is unsure about how to account for the same: A Tennant House has costed ₹15,00,000 to the company five years ago. The property is freehold and is let out to private individuals for six-month periods. The current market value of the property is ₹17,50,000. What is the correct accounting treatment for the above property?
(A) (A) The property is owned by Cropex Ltd. and it is to be accounted on cost model as per AS 10 Property, plant and equipment. Depreciation to be calculated at ₹3,00,000 as 5 years useful life. Revaluation of the property is done as per accounting policy.
(B) (B) Held for its investment potential and not for use by Cropex Ltd. Treat as investment property in accordance with AS 13 Accounting for Investments, where they are accounted for in accordance with cost model as prescribed in AS 10, Property, Plant and Equipment.
(C) (C) Treat as investment property in accordance with AS 13 Accounting for Investments, apply only fair value model. In case of Cropex Ltd., the current market value of ₹17,50,000 to be recorded.
(D) (D) The property is accounted as per AS 10 'Property, plant and equipment'. Only fair value model is allowed. In case of Cropex Ltd., the current market value of ₹17,50,000 to be recorded.

Suggested Answer and Working Notes:

Correct Answer: Option (B)

(B) Held for its investment potential and not for use by Cropex Ltd. Treat as investment property in accordance with AS 13 Accounting for Investments, where they are accounted for in accordance with cost model as prescribed in AS 10, Property, Plant and Equipment.

Topics: AS 13, AS 10, Applicability of AS

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic