Investment property purchased for sale

khawarbutt Registered Posts: 9 New contributor 🐸
My employer has a few residential properties that are held for earning rentals. It also purchases residential properties with the intention of selling after carrying out repairs. My question relates to the latter. My managers has advised me that all the expenses relating to properties purchased for sale after renovation need to be capitalised as part of the cost. This includes all the expenses including repairs, building insurance, electricity & gas, council tax and water rates etc. Upon sales the cost is then compared to sales proceeds to calculate gain/loss made and transferred to P&L. Is this the correct accounting treatment? Under FRS 102 would the property be classified as PPE or inventory?


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