w.i.p

This query is : Resolved

asha fernandes (Querist)
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12 June 2009 dear sir,madam,

i seek ur guidance on the follwing matter:

I have a client who is a private ltdcompany engaged in civil construction. their projects take about 3-5 months to complete.

1) is AS-7 still applicable?

2) as of march 2009 they have 5 projects which are partly complted for which invoices are raised in the month of april 2009. can i just calculate W.I.P for those priojects and bring in the income when the invoices are raised or i need to calculate income as per AS-7..

3) it is a company and accrual systemof accounting isfollwed. in the field that they are the customers dont acknowledge part work done and nothing is due to them unless the work is fully complted . so is AS-7 contradicting AS-9 here?

4) are there any other mandatory accounting standards that i need to follow regarding the above said company

thanks in advance and waiting for ur valuable advice

CA Anisha Ray

CA Anisha Ray (Expert)
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12 June 2009 Dear Asha,

1) AS-7 will be applicable as the projects are started in one accounting Year and get completed in a different accounting year.

2) U will have to find the % ge of work completed and recognise Income and costs accordingly.

3) If U are Following AS 7 , then revenue will be recognised as per AS-7, so naturally, AS-9 wont be apllicable.
Both are mutually exclusive.

4) Application of Accounting Standards will be based on particular Transactions. A general comment cant be given.