In Kurts Development, the court said that infrastructure costs should be added to the cost of land held for sale because they're crucial for the development process. Even though the land might end up belonging to the council and isn't sold separately, these costs still increase the value of each piece of land.
So, when land is in its original state (called broadacres) and when it's divided into lots for sale, both internal and external infrastructure costs must be factored in. If possible, each cost should be assigned to a specific lot. If not, a fair method should be used to split the costs among the lots.
Reasonable methods might include basing it on the expected selling prices of the lots, their frontage, area, or number. The expected selling price method is often the best.
Here's a checklist of expenses to include (or not) in the land's cost when it's held for sale, based on absorption costing. You can refer to IT 2350 for more details about valuing trading stock.
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