how to treat & record entries in the book for WIP (ie inventory) of a construction company given to a partner as settlement of his retirement claim on retirement , provided cost of wip given is more than retirement partners claim ???
plz. help.....
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Accounting & taxation treatment
Replies (5)
how can wip be handed over as a settlement claim to the partner
partners capital a/c. Dr.
to work in progress
to work in progress
what about the difference in amount as i already mentioned the amt of WIP more than partners retirement claim.???
firm can recover the excess claim amount
sir , construction companies do have WIP until there project is copleted . further no degree of completion is mentioned for wip , it can be that plots recorded as wip may have minor work left out , still they will be categorised as wip , as such 2 plots included in WIP have been given for retirement settlement claim.
further we have section 45(4) which talks only about capital asset , i found silence in law for wip/ inventory distributed , so the problem is if i record it as a part of sale , how should i account for the loss in the books on such transaction???
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