Accounting for cost of a fixed asset ordered but not received.

Here the company should have actually shown the advance paid for the bus as advance to supplier in the closing of previous year balance sheet. How can asset not in possession of the company be called as "Work-In-Progress". Then comes the point whether you can show the current liablity or not. Since the bus has not been received by the company in the previous year , I have assumed that the liability to pay for the bus shall only arise once the company receives the BUS. Hence the treatment for the purchase of bus made by the company is incorrect.

You are advised to go throughly the accounting standard for the same.

This ten lac should be shown in Balance Sheet in

Note 14 Long Term Loans and Advnace as Advance for capital Goods

The auditee argues that, as per AS-4, it is event occured after balance sheet date but before approving the accounts. The condition existing on balance sheet date i.e. advance given for bus,  has been changed before certifiying the accounts., i.e. bus has been delivered but not used. Hence,it is an adjustable event. They want to disclose it as capital work in progress under fixed assets and want to create liability for the balance amount payable. 

Whether their stand is correct as per provisions of AS-4?