AS - 7 Valuation - Contract costs
This query is : Resolved
Swaminathan
(Querist)
12 January 2009
Should we have to include prov for bad debts and foreseeable losses as contracat costs for the purpose of arriving at the Percentage of completion.
Zainul Tawawalla
(Expert)
14 January 2009
According to AS 7, all the cost incurred on a particular contract shall be taken in to consideration for arriving at % age of completion. However, provision for doubtful debts should not be taken as the very purpose of AS 7 would be defeated. Only direct cost for a particular contract shall be taken. Forseeable losses should not be taken for % age of completion but they should be accounted for as per AS 7.
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