Architect Fees

The following illustration illustrates one method of determining the stage of completion of a contract and the timing of the recognition of contract revenue and expenses (see paragraphs 21 to 34 of the Standard-7). (Amounts shown hereinbelow are in Rs. lakhs) A construction contractor has a fixed price contract for Rs. 9,000 to build a bridge. The initial amount of revenue agreed in the contract is Rs. 9,000. The contractor’s initial estimate of contract costs is Rs. 8,000. It will take 3 years to build the bridge. By the end of year 1, the contractor’s estimate of contract costs has increased to Rs. 8,050. In year 2, the customer approves a variation resulting in an increase in contract revenue of Rs. 200 and estimated additional contract costs of Rs. 150. At the end of year 2, costs incurred include Rs. 100 for standard materials stored at the site to be used in year 3 to complete the project. The contractor determines the stage of completion of the contract by calculating the proportion that contract costs incurred for work performed 80 AS 7 upto the reporting date bear to the latest estimated total contract costs. A summary of the financial data during the construction period is as follows: (amount in Rs. lakhs) Year 1 Year 2 Year 3 Initial amount of revenue agreed in contract 9,000 9,000 9,000 Variation —— 200 200 Total contract revenue 9,000 9,200 9,200 Contract costs incurred upto the reporting date 2,093 6,168 8,200 Contract costs to complete 5,957 2,032 —— Total estimated contract costs 8,050 8,200 8,200 Estimated Profit 950 1,000 1,000 Stage of completion 26% 74% 100% The stage of completion for year 2 (74%) is determined by excluding from contract costs incurred for work performed upto the reporting date, Rs. 100 of standard materials stored at the site for use in year 3.

For more detail please follow AS-7

Depend upon Your friend Firm status If Proprietorship Firm,Mostly no laws has mandatories follows.He has to consistently follow the same accounting principles during the periods of contract.

I am working in construction field, I am beginer for learning to service tax, incometax & VAT pl send me updated caluculations ,circulars and latest G.O s regarding construction field