Land can be classified in individual categories and accounts: bare land (no properties), land with possess buildings land with buildings of 3rd functions and land with layers. Structures consist of installations, restore, variations and infrastructure.

Auditing of “Lands” and “Developing tasks” has the following key ambitions:

– Make confident of the material existence of this sort of property

– Validate no matter whether the business is the genuine operator of its own property

– Make certain that belongings have been assessed and registered in the stability sheet according to their right value

– Thinking about their servicing situation and age, draw pertinent conclusions with regard to justification of depreciation steps as nicely as depreciation sum and price applied:

– Make confident that acquire and transferals of fastened assets are reflected in the bookkeeping through pertinent registrations

– Assess the threats to possession of mounted belongings (e.g. hearth) and assess them with insurance policy deals signed.

Accounting and technological tips

Auditing contains at the very least the subsequent:

– Check out the justification of home on land and other immovable property, house titles, cadastral registers, mortgage loan registers and buy contracts on the day of balance sheet

– Each set asset in this section should be crosschecked and correspond with: purchase cost, cadastral assessment, insurance policy value, accounting benefit, mortgage loan alienation value, income value, production benefit (true or theoretical), replacement price, benefit from examination and tax reports

– Remark on heritage of figures for all changes taking place in the respective accounts of these investments

– Look at each sign or component related to accounts for lands and structures and choose whether alterations should be regarded as as investments or utilization expenses

– Proceed with internet site visits in purchase to notice any new installations or damages for the function of crosschecking them with respective charges in the bookkeeping

– Identify eventual non-occupied places

– Determine the growing older condition and routine maintenance of buildings and crosscheck with amortizations made until the second of audit

– Make positive that required amortizations have been properly manufactured, in conformity with appropriate legal guidelines and guidelines and verify calculations produced for these amortizations

– Consider potentials for fraudulent bookkeeping: unjustified obtain at quite higher cost, unjustified sale at very low price, inclusion of utility costs in mounted belongings or vice-versa, cost-free-of-demand lease contracts, cost-free-of-cost contracts for 3rd get-togethers, use of company installations for personalized needs, deviations among true price, registered price tag and the cost in the reliable act

– For new properties, verify the real expense, eventual destruction costs and validate regardless of whether ideal delivers have been noticed

– Look at how the value of properties is determined and whether staff wages are entered in the bookkeeping
– Make certain that values have been modified to mirror adjustments in replacement value

– Detect cases when charges have been hidden in notary acts

– Take a look at processes used so that every expenditure purchase is quickly covered by insurance policies packages

– Look at bookkeeping for damages in the buildings

– Analyze commissions and payments to intermediaries in the course of acquire of lands and structures

– Look at actions to sustain fastened belongings in good condition to guarantee their very best use (upkeep providers, periodic inspections, and so on.)

– Check out for true insurance policies, house loan, pledged by the company which impact land or immovable house. If indeed, take a look at the guaranties utilized and at least examine: the nature of guaranties, nature and quantity of commitments guarantied and beneficiaries

– In the annex, mention modifications in land and immovable property transpired throughout audit

Special focus must be devoted to accounting therapy of fixed belongings in this section:

a) Accounting therapy for land acquire and sale

1. When land is entered in a firm’s belongings, the benefit is debited in account 211 “Land” as contribution benefit, buy price tag or credit respectively in account for “principal property (person or team one) or in the account “Partners account for contributions in the business” or “Suppliers of fixed belongings”. Account 211 registers the value of land owned by the firm. It is important to distinguish amongst individual accounts, dependent on the mother nature of component aspects of fixed assets:

– Bare lands (no buildings)

– Improved lands (with channels, and so on)

– Underground and above soil: phrases utilized when the company is not the proprietor of the three elements attached to the very same component of terrain: land, underground and above soil

– Exploited lands (carriers, mineral levels) which are the only factors topic to depreciation

– Household terrains with a single far more buildings.

2. For the duration of sales, the value of origin for aspects sold and that of amortization, if any, are taken from the respective accounts. Their internet sum is debited to account 652 “Accounting worth of factors for fastened assets marketed” at the same time, account 752 “Incomes from factors of fixed belongings sold” is credited in the debit of account 462 “Ask for to receive from fixed belongings sold”. Provisions are closed in credit rating of the respective subdivision of account 78 “Reacquisition of amortizations and provisions”.

b) Accounting treatment of sale-obtain functions in design

In situation a development is obtained for a cost which does not separate land price tag from building price, only the developing value part is matter to amortization. As a result, when a firm buys a creating, we have to make sure regardless of whether it has divided the international obtain cost in proportion with the relative benefit attributed to each of the two components (account 211 “Land” and 212 “Creating” in the total benefit of immovable house).

one. When buildings are entered as company home, account 212 “Buildings” or its subdivisions are debited:

– For incoming benefit,
– For acquire price tag,
or for the real value of residence creation, in credit of:
– Account 101 “Principal assets (principal or individual)” or account 4561 “Associates – Account for contributions in society”,
– Account 404 “Suppliers of fastened property or other respective accounts,
– Account seventy two “Creation of fixed property”.

two. In circumstance of sales, the price of origin for buildings marketed and respective amortizations are taken from their respective accounts. Their big difference is debited to account 652 “Accounting price of elements for fixed property marketed” at the same time, account 752 “Incomes from components of mounted assets bought” is credited in the debit of account 462 “Ask for to obtain from set belongings offered”. 註冊香港公司 are closed in credit score of the respective subdivision of account 78 ” Re-acquisition of amortizations and provisions”.