Sra construction and their accounting

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Querist : Anonymous

Querist : Anonymous (Querist)

11 January 2013 What is SRA construction company? What is procedure they follow in their business?
What is the procedure for accounting???

Querist : Anonymous

Querist : Anonymous (Querist)

11 January 2013 Isn't there any one to help on this

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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25 July 2025 Sure! Here's a clear explanation of **SRA Construction Companies** and their accounting:

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### What is SRA Construction Company?

**SRA** stands for **Slum Rehabilitation Authority**. It is a government authority (primarily in Maharashtra, India) that facilitates the rehabilitation and redevelopment of slum areas.

* An **SRA Construction Company** is typically a developer or contractor appointed or authorized to carry out the redevelopment and construction activities under the SRA scheme.
* These companies work with the government and slum dwellers to demolish unsafe structures and rebuild residential or commercial units.
* The company generally gets rights to sell some built-up area (after rehabilitation) to recover costs and earn profits.

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### What Procedure do they follow in business?

1. **Agreement with Government / SRA:**
The company signs an agreement with the SRA or local authority for a specific project.

2. **Survey and Demolition:**
Survey the slum area, get consent from slum dwellers, and then demolish existing unsafe structures.

3. **Construction & Rehabilitation:**
Build new rehabilitation units for slum dwellers as per the agreement.

4. **Commercial Sale:**
Sell remaining constructed units (commercial or residential) to recover costs and profit.

5. **Compliance & Approvals:**
Follow all legal, environmental, and municipal approvals and rules throughout the process.

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### What is the procedure for accounting?

Accounting in SRA construction projects has some unique aspects due to its nature:

1. **Project-wise Accounting:**
Maintain separate books for each SRA project because revenue and costs are specific to each redevelopment.

2. **Revenue Recognition:**

* Revenue from sale of rehabilitation units (to slum dwellers) may be recognized differently, sometimes at cost or zero profit depending on the agreement.
* Revenue from sale of commercial/saleable units is recognized on usual percentage-of-completion or on possession basis.

3. **Cost Capitalization:**
All direct costs such as demolition, construction, approvals, and overheads related to the project should be capitalized.

4. **Treatment of Land and Rights:**

* The land may not be outright owned; often the company has “development rights” or “transferable development rights.” Accounting for this is done as per applicable standards.
* Sometimes the cost of land is adjusted with cost of rehabilitation units or rights given to slum dwellers.

5. **Contract Accounting:**
Apply **percentage of completion method** (Accounting Standard 7) to recognize profits in stages for construction activities.

6. **Disclosure:**
Provide detailed disclosures in financial statements regarding nature of projects, accounting policies, and status of rehabilitation.

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### Summary

| Aspect | Details |
| ---------------------- | --------------------------------------------------------- |
| What is SRA Company? | Developer under Slum Rehabilitation Authority schemes |
| Business Procedure | Agreement → Demolition → Rehabilitation → Commercial sale |
| Accounting Method | Project-wise, cost capitalization, % completion method |
| Revenue Recognition | Differ for rehab units and commercial sale units |
| Special Considerations | Land rights, cost treatment, compliance disclosures |

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If you want, I can share a sample accounting entry or a template for SRA project accounting. Would you like that?

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