About the reserves
This query is : Resolved
07 November 2011
sir when in contract accounting, when the contract is not fully complete,then potion is crefited to P and L and other to reserves. How will be that reserve treated in future?
CA Jeen paul
(Expert)
08 November 2011
PRIMARY OBJECTIVE OF THE AS7 CONSTRUCTION CONTRACTS (REVISED) ISSUED BY ICAI IS THE ALLOCATION OF "CONTRACT REVENUE" AND CONTRACT COST AND ARRIVE AT THE PROFIT & LOSS FOR THE ACCOUNTING PERIOD OF THE ENTITY.
PROFIT/LOSS ARRIVED AT AS PER AS7 DEEMED TO BE THE PROFIT OR LOSS OF THE ENTITY FOR THE ACCOUNTING PERIOD AND THE ENTITY CAN UTILISE THE RESEVES OR PROFIT AS ANY OTHER TYPE ENTITY WITHIN THE LIMITS OF THE VARIOUS ACTS APPLICABLE TO THE ENTITY.
THUS THE PROFT/RESERVE TRANSFERED IS NORMAL PROFIT AND CAN BE UTILISED AS LAID DOWN BY THE LAW
PROFIT/LOSS ARRIVED AT AS PER AS7 DEEMED TO BE THE PROFIT OR LOSS OF THE ENTITY FOR THE ACCOUNTING PERIOD AND THE ENTITY CAN UTILISE THE RESEVES OR PROFIT AS ANY OTHER TYPE ENTITY WITHIN THE LIMITS OF THE VARIOUS ACTS APPLICABLE TO THE ENTITY.
THUS THE PROFT/RESERVE TRANSFERED IS NORMAL PROFIT AND CAN BE UTILISED AS LAID DOWN BY THE LAW
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