accounting standard 7

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ahmeshere (Querist)
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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)
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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)
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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)
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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)
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28 August 2009 urgent

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