Sra construction and their accounting

This query is : Resolved

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 online

Aashok Kumar Sharma online

(Expert)
Follow

25 July 2025 Sure! Here's a clear explanation of **SRA Construction Companies** and their accounting:

---

### 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.

---

### 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.

---

### 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.

---

### 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 |

---

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

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Join the CA Students WhatsApp Community for ICAI Updates, Trending Courses & Notes!

Similar Resolved Queries

Unanswered Queries

Popular
Recent

Trending Online Classes

Direct Tax Laws & International Taxation May 26,Sept 26 & Jan 27

CA Arvind Tuli

Enroll Now
Audit Fast Track Recorded Batch For May 26,Sept 26 & Jan 27

CA Aarti Lahoti

Enroll Now
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English

CA Bhanwar Borana & CA Shubham Keswani

Enroll Now

view all classess

Meet our CAclubindia PRO Members

SARAVANAN PALANISAMY

GST Karimnagar state

Darshan

Krishnamohan Gangaraju

CA Bijo scaria

Subscribe Now

Sra construction and their accounting

Similar Resolved Queries

Trending Online Classes

Meet our CAclubindia PRO Members

Quick Links

Browse by Category

Latest Job Openings

Senior Executive

Manager- Finance and Compliance

GST CONSULTANT

GST CONSULTANCY

Accountant

CA Final

Article Assistant

Associate CA