Land can be categorized in different classes and accounts: bare land (no structures), land with possess structures land with structures of third get-togethers and land with layers. Buildings consist of installations, fix, variations and infrastructure.
Auditing of “Lands” and “Constructing tasks” has the adhering to main objectives:
– Make confident of the materials existence of these kinds of belongings
– Confirm whether or not the firm is the genuine proprietor of its very own belongings
– Make positive that assets have been assessed and registered in the equilibrium sheet in accordance to their proper price
– Contemplating their maintenance condition and age, draw related conclusions with regard to justification of depreciation steps as effectively as depreciation sum and rate applied:
– Make certain that obtain and transferals of mounted assets are mirrored in the bookkeeping by means of pertinent registrations
– Assess the threats to ownership of mounted assets (e.g. hearth) and compare them with insurance policies deals signed.
Accounting and technological tips
Auditing involves at least the following:
– Check the justification of residence on land and other immovable residence, home titles, cadastral registers, mortgage registers and obtain contracts on the date of harmony sheet
– Every mounted asset in this segment ought to be crosschecked and correspond with: acquire cost, cadastral evaluation, insurance policy price, accounting price, home loan alienation price, sales value, production price (real or theoretical), substitute price, worth from evaluation and tax reviews
– Remark on heritage of figures for all changes taking place in the respective accounts of these investments
– Examine every indication or element associated to accounts for lands and structures and choose whether alterations need to be deemed as investments or utilization costs
– Move forward with web site visits in buy to observe any new installations or damages for the function of crosschecking them with respective expenses in the bookkeeping
– Identify eventual non-occupied places
– Ascertain the growing older condition and routine maintenance of structures and crosscheck with amortizations manufactured until the moment of audit
– Make confident that essential amortizations have been effectively manufactured, in conformity with relevant laws and principles and check calculations created for these amortizations
– Think about potentials for fraudulent bookkeeping: unjustified buy at quite substantial price, unjustified sale at very low cost, inclusion of utility fees in fixed property or vice-versa, free of charge-of-cost lease contracts, cost-free-of-demand contracts for 3rd parties, use of firm installations for personal purposes, deviations amongst actual value, registered cost and the price in the authentic act
– For new structures, verify the actual expense, eventual destruction fees and validate regardless of whether ideal provides have been noticed
– Analyze how the price tag of buildings is established and whether or not personnel wages are entered in the bookkeeping
– Make sure that values have been modified to reflect changes in substitute value
– Detect instances when rates have been concealed in notary functions
– Look at techniques used so that every investment acquire is right away covered by insurance packages
– Examine bookkeeping for damages in the properties
– Take a look at commissions and payments to intermediaries in the course of buy of lands and buildings
– Examine actions to maintain mounted assets in great issue to guarantee their greatest use (servicing companies, periodic inspections, and many others.)
– Examine for real insurance policy, house loan, pledged by the business which impact land or immovable property. If indeed, look at the guaranties applied and at least check: the mother nature of guaranties, mother nature and sum of commitments guarantied and beneficiaries
– In the annex, point out changes in land and immovable house transpired in the course of audit
Specific interest must be devoted to accounting treatment method of mounted assets in this section:
a) Accounting therapy for land buy and sale
1. When 註冊香港公司 is entered in a firm’s belongings, the price is debited in account 211 “Land” as contribution price, buy value or credit score respectively in account for “principal assets (individual or group 1) or in the account “Partners account for contributions in the company” or “Suppliers of fastened property”. Account 211 registers the benefit of land owned by the firm. It is essential to distinguish between individual accounts, primarily based on the mother nature of element components of fastened property:
– Bare lands (no buildings)
– Improved lands (with channels, etc)
– Underground and above soil: terms utilized when the firm is not the owner of the 3 components attached to the same element of terrain: land, underground and earlier mentioned soil
– Exploited lands (carriers, mineral layers) which are the only aspects subject matter to depreciation
– Residential terrains with a single more buildings.
2. For the duration of revenue, the value of origin for factors marketed and that of amortization, if any, are taken from the respective accounts. Their net sum is debited to account 652 “Accounting benefit of elements for fixed assets offered” at the same time, account 752 “Incomes from aspects of fixed assets bought” is credited in the debit of account 462 “Request to get from fixed assets offered”. Provisions are closed in credit rating of the respective subdivision of account 78 “Reacquisition of amortizations and provisions”.
b) Accounting treatment of sale-purchase functions in construction
In scenario a development is bought for a cost which does not separate land price from building cost, only the constructing price tag part is topic to amortization. As a result, when a company purchases a constructing, we have to make certain regardless of whether it has divided the global acquire value in proportion with the relative value attributed to each and every of the two elements (account 211 “Land” and 212 “Building” in the whole price of immovable residence).
1. When buildings are entered as organization house, account 212 “Structures” or its subdivisions are debited:
– For incoming price,
– For obtain price,
or for the true expense of house creation, in credit of:
– Account 101 “Principal assets (principal or personal)” or account 4561 “Associates – Account for contributions in society”,
– Account 404 “Suppliers of mounted assets or other respective accounts,
– Account seventy two “Manufacturing of fixed property”.
two. In case of product sales, the worth of origin for buildings bought and respective amortizations are taken from their respective accounts. Their big difference is debited to account 652 “Accounting benefit of elements for fastened assets marketed” at the exact same time, account 752 “Incomes from aspects of fastened assets marketed” is credited in the debit of account 462 “Request to receive from fastened property bought”. Provisions are shut in credit of the respective subdivision of account seventy eight ” Re-acquisition of amortizations and provisions”.