As-7 applicablity

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Querist : Anonymous

Querist : Anonymous (Querist)

07 May 2012 Our company engaged in property developement. Right now we have only one residential project. We started the construction 3 years back. Expenses incurred upto last FY 10-11- shown as WIP in balance Sheet.

FY 11-12 we started booking and got advance from some customers. it will take another 2 years to complete the project.

Kindly explain applicabiity of AS-7 in this case.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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07 May 2012 AS-7 is applicable to contractors engaged in construction activities. Generally, a developer is not treated as a contractor.
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Developers may engage contractors to perform the construction work and AS-7 applies to such contractors.
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In other words In a case where developer has not entered into a construction contract with other parties (land owners), and carrying on own construction, AS-7, will not apply.
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Querist : Anonymous

Querist : Anonymous (Querist)

08 May 2012 Thanks for valuable advise, One more doubt amount lying WIP should written off after completion of the project only?

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