Today, THAI ACCOUNTANT answer a question from one of our avid readers. How to account restoration expenses of real estate development? See our answer below and how you can account the cost of the company for real estate restoration of your company here in Thailand.
We have real estate development projects located in the flood affected areas. How should we record project restoration expenses due to floods?
Thank you for your inquiry. For the accounting treatment of the restoration expenses, my advice depends on the status of your project as classified as below:
Status 1: If your project has already been sold out, the restoration expenses should be charged to the income statement when incurred.
Status 2: If your project has been partly sold, the restoration expenses should be apportioned between the “sold” part and “unsold” part (inventory). Costs relating to the sold part should be recorded as expenses, while those relating to the unsold part should be recorded as a cost of inventory.
Contact Thailand accountant, MSNA for your Thailand accounting and tax questions.