As 7

505 views

Save Share

Join Us Follow Us Add as Source

neeraj

194 Points Posted on 07 July 2014

x ltd. undertook 2 contracts for construction of bridge & road, follwing are on 31-3-2010

contract 1 contract 2

contract price 560 900

cost incurred 410 50

estimated future cost 290 910

progessive payment 375 45

what amt. should be recognised as provision for loss

ans. contract 1 loss to be recognized rs.82 lakh & provision=58 lakh

contract 2 provision 60

why the 2nd contract the provision is 60 lakh

Replies (5)

Tribhuvan Aditya Singh

Student as well as Self-employed

3853 Points Posted on 07 July 2014

since the degree of completion is not more than 50% in case of contract 2, therefore no profit or loss has been recognised and only provision has been made.

neeraj

194 Points Posted on 08 July 2014

Originally posted by : Tribhuvan Aditya Singh
	since the degree of completion is not more than 50% in case of contract 2, therefore no profit or loss has been recognised and only provision has been made.

thnx

but can u plz quote the para no. which tell such thing....i checked whole AS not found

Tribhuvan Aditya Singh

Student as well as Self-employed

3853 Points Posted on 08 July 2014

i dont know how were you looking it for.... but everything is clearly given in paragraph 21 to 35 of AS-7.

neeraj

194 Points Posted on 08 July 2014

Originally posted by : Tribhuvan Aditya Singh
	i dont know how were you looking it for.... but everything is clearly given in paragraph 21 to 35 of AS-7.

I rechecked the para 21-35 but not found anywhere that since completion level is below 50% no profit/loss will be recognised. plz can u quote exact para for that....

neeraj

194 Points Posted on 08 July 2014

Originally posted by : Tribhuvan Aditya Singh
	i dont know how were you looking it for.... but everything is clearly given in paragraph 21 to 35 of AS-7.

plzreply my friend