hi,
when can we recognise revenue in construction business. How do we treat advance received for booking residential unit yet to construct and sale consideration after completion of units and how to treat transaction pertaining to joint development agreement and implications under IT, GST and RERA
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Accounting query for construction business
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Quick Summary
A contract ledger is kept in which a separate account is opened for each contract undertaken. It is usual to give each contract a distinguishing number. A contract account is debited with all direct and indirect expenditure incurred in relation to the contract.
Revenue recognition in construction business is generally dealt in the following ways:
1.Cost plus contract
2. work completed in proportion to work certified.
3. Contract revenue is generally recognized and measured by a host of uncertainties.The estimates needs to be revised as events occur and uncertainties4. are resolved.Therefore the amount of revenue may increase or decrease .
Now let's be specific the advance received depends upon the following and its adjusted either against subsequent bills raised to client.It may be a mobilization advance or advance as per the conditions of the contract.
The client will deduct tds under sec 194c as per the provisions existing.
The contractor bills include gst depending on the nature of contract .
Rera safeguard the interest of customers/end users of the flat.RERA IS AN AUTONOMOUS BODY.
1.Cost plus contract
2. work completed in proportion to work certified.
3. Contract revenue is generally recognized and measured by a host of uncertainties.The estimates needs to be revised as events occur and uncertainties4. are resolved.Therefore the amount of revenue may increase or decrease .
Now let's be specific the advance received depends upon the following and its adjusted either against subsequent bills raised to client.It may be a mobilization advance or advance as per the conditions of the contract.
The client will deduct tds under sec 194c as per the provisions existing.
The contractor bills include gst depending on the nature of contract .
Rera safeguard the interest of customers/end users of the flat.RERA IS AN AUTONOMOUS BODY.
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