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Revenue recognised on prorata basis allow on income tax

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Querist : Anonymous

Querist : Anonymous (Querist)

13 August 2011 My client Having a ship manufacturing activity can they recognise the revenue or expenses as per AS-7 and same revenue and expense is allowed in income tax. What will happen or how my client recognised the revenue and expenses in the books of account when they cannot raised the bill on percentage completion of work due to certification of percentage completion is not received from buyer but they received the grant( in terms of money) time to time from the buyer.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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13 August 2011 Clause 29(a) of AS-7 may be followed which read as follows:-

The stage of completion of a contract may be determined in a variety of ways.

Depending on the nature of the contract, the methods may include:
(a) the proportion that contract costs incurred for work performed upto the reporting date bear to the estimated total contract costs;

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