Write down of land bank

Write down of land bank

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What are the accounting entries to write down property stock to its nrv.  This relates to a reduction of £6m in the valuation of property stock for a property developing limited company.

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By shawjd
27th Feb 2011 21:23

Write down of Land bank accounting entries

On the understanding that the land bank is recorded at a cost in excess of £6m, the the accounting entry is:

Cr Stock (B/S)                              £6.0m

Dr Impairment loss (P/l)   £6.0m

Being write down of land bank to net realisable value.

The effect of this is to reduce the carrying value of the asset by £6.0m and recognises the loss of value in the profit and loss account as an expense.

Hope this helps...

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