accounting standard 7

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ahmeshere (Querist)

26 August 2009 Revenue and costs arising on account of a contract are to be recognised based on percentage completion method as per AS. But, is there any concept of "average profit" prevailing in AS 7 based on which we have to recognise profits from a contract on the basis of average profits from such contract . If yes, kindly explain with the help of an example, and if not, kindly explain on what basis profits will have to be recognised.

Navin

Navin (Expert)

26 August 2009 Profits need to be recognised based on Incremental Work in progress i.e.
Cl WIP
Less Op WIP
Incremental WIP
To show 8% or more of Incremental WIP is fine.

ahmeshere

ahmeshere (Querist)

27 August 2009 I need further clarification on this issue. Are profits needed to be recognised based on WIP? If yes, then what is the method. How do we recognise?Do u suggest recognising profits as a percentage of WIP. IF yes, then how do we justify the percentage?kindly help

ahmeshere

ahmeshere (Querist)

27 August 2009 Presently we are carrying out statutory audit of a construction company. So, i need to know how to check WIP, contract revenue.can anyone help me in this regard by providing the detailed procedure.

ahmeshere

ahmeshere (Querist)

28 August 2009 urgent

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