Difference in accounting
This query is : Resolved
04 January 2013
Our client has started a new project(Building Complex).We are capitalising all the expenditures incurred till now and thereby leaving the profit & loss statement blank.According to another CA the expenditures should be shown through P/L and do not leave it blank.What is the correct procedure?Plz answer with material arguments!
Guest
Guest
(Expert)
04 January 2013
In case your client is a builder / infrastructure developer then the said expenses are to be debited in respective heads in Profit & Loss A/c. At the year end the said expenses are to be transferred to the closing stock work in progress a/c. So there will be no profit / loss situation on account if this project.
In case of other clients i.e. who do not belong to the category of builder / developer, the said expenses are to be accumulated in capital work in progress a/c. And when the asset is ready to use the said capital WIP a/c will be capitalised.
In case of other clients i.e. who do not belong to the category of builder / developer, the said expenses are to be accumulated in capital work in progress a/c. And when the asset is ready to use the said capital WIP a/c will be capitalised.
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