Accounting Standard - 7

This query is : Resolved

CA.Ashish (Querist)
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26 March 2009
AS-7 “Construction Contracts”, whether applicable or not, to projects undertaken by the enterprises on its own account as a commercial venture in the nature of production activities?

E.g. House construction by Local Authority or company and after completion sales by draw.
E.g. Flats construction by a Co-operative society for its members.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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24 September 2011 AS 7 is not applicable to developers. The reason being that AS 7 defines construcion contract as a contract which is specifically negotiated for the construction of an asset.

The developers do not enter into a construction contract with their buyers. They undertake construction on their own account and later sell the property to the buyers.

They, therefore enter into an agreement for sale.

Therefore, AS 7 is not applicable.

CA.Ashish

CA.Ashish (Querist)
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16 November 2011 Thanks Siddhartha for replying the query.

After posting my query even though after 2.5 years I got reply. Perhaps experts were not ready to reply for this.

I posted when I was a student and when I not got answer through CACLUBINDIA I solved it other way. Now I am a CA.

Need to improve CACLUBINDIA....????

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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16 November 2011 Thats true. Actually I have started participating actively only recently. I was just going through the queries and I found yours.

CA.Ashish

CA.Ashish (Querist)
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19 November 2011 That's good...Keep going ahead...all the best ahead to you Siddhartha.

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