AS-7
This query is : Resolved
09 December 2009
Hi all
How to value closing working progress under AS-7. Under percentage of completion method total contract price X % of work done becomes the Contract revenue. Then how the closing work in progress will comes to picture.
What is the accounting entries for recognizing contract revenue under the % of completion method?
How to value closing working progress under AS-7. Under percentage of completion method total contract price X % of work done becomes the Contract revenue. Then how the closing work in progress will comes to picture.
What is the accounting entries for recognizing contract revenue under the % of completion method?
09 December 2009
In the referred situation no need to value WIP. Closing WIP will come into picture only when construction is not started. For example, project is announced for which land has been purchased and no construction work has been started, then cost of land has to be shown as WIP.
Accounting entry is:-
1) Bank a/c Dr xxxxx
To Sundry creditors A/c xxxxx
(Being advance amount received
from awarders.)
2) Sundry debtors a/c Dr xxxxx
To Contract income a/c xxxxx
(Being contract income recognized
as per AS-7).
Accounting entry is:-
1) Bank a/c Dr xxxxx
To Sundry creditors A/c xxxxx
(Being advance amount received
from awarders.)
2) Sundry debtors a/c Dr xxxxx
To Contract income a/c xxxxx
(Being contract income recognized
as per AS-7).
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