Apart from normal accounting, the accounting standard -7 is to be followed for accounting for contractors.

i am herewith submitting the summarised AS-7.

Thanks for the valuable reply.

Actually I know about AS-7 & in need of Comprehensive guidance for the topic under discussion.

The reason is that my conversation with one of my clients are under WIP  & likely to be materialise.

If you can help by deep guidance then it would be a pleasure for all concerned people.

Thanks again.

Dear

Revenue accounting tome made as per AS 7 - Pl find encld a file for your easy reference. As fat as WIP is concerned All the expenses viz., ram materials (Steel,Cement etc., etc) incurred for the project up to the a/cing year end along with labour  expenses & the entire expenses has to be treated as W I P since its an ongoing un completed project.

Dear

Revenue accounting tome made as per AS 7 - Pl find encld a file for your easy reference. As fat as WIP is concerned All the expenses viz., ram materials (Steel,Cement etc., etc) incurred for the project up to the a/cing year end along with labour  expenses & the entire expenses has to be treated as W I P since its an ongoing un completed project.

Thanks a lot Narasimhan sir,

I was a great help for me and also other related people as you can see the information given by you has been downloaded for good number of times.

Thanks a lot sir & keep sharing. I request other knowledgeable people to share their  information here for complete knowledge of Contract/Builders' accountancy.

Thanks & regards,

Ashish Joshi

Dear all

I have forgetton to add one more point ie., while accounting WIP it should be based on Management's Policy (which will be furnished in the Notes on Accounts) For example if the Managemnt Policy declared that Less than 20% (or 10% as the case may be)  of the Project Cost (Project exp) will  not be comes under the purview of WIP it can be treated as Expenses only and it need not be accounted as W I P. But it depends upon the Project Value. For example if the Project Value is 80 lakhs and expenses incurred is areound <5.00 lacs it need not be considered as WIP since its less than the declared value for accounting WIP as per the Management Policy & it attracts its own benefits.