Assess new house construction strated in huf status.
Some houses construction expenses pay through on huf status
Some houses construction expenses pay through on individual status.
Assess house construction expenses pay through on individual status accounting treatment and accepted under I.t. act.
If family house is constructed by HUF then following accounting treatment may be referred;-
In respect of money paid by HUF:-
HUF may open up different head of expenses for House under construction (HUC) and paid money debited the different heads and on completion of construction , all HUC head to be merged to form a assets i.e. House. For example:-
HUC-material A/c Dr.
HUC-Labour A/c Dr.
Then on completion of construction
House A/c Dr.
To HUC-material a/c
To HUC- Labour a/c
for any pending payment to creditor for house
creditor a/c dr.
In respect of money paid by any member of HUF:-
If any money is paid by any member then it may be treated as unsecured loan of that member for HUF and all the expenses to be booked only by HUF not by member personally;-
Money paid by huf member for material for house construction then HUF shall pass following entry;-
HUC-material a/c Dr.
To Name of paying memer
In this way the money paid by member may stand as creditor for the HUF. and It may be displayed in balance sheet of HUF as unsecured loan or creditor.
and this money may be paid back by HUF:-
Name of paying member a/c dr.
To cash/ bank
if the paying member forgo that money and willing to gift it to HUF then huf may write off creditors and increase its capital as follows;-
Name of paying member a/c Dr.
To Gift from members of HUF
Gift from members of HUF a/c Dr.
to HUF capital
But remember any income generated from the money gifted by any member of HUF, will be clubbed in the hands of that member for the purpose of income tax.