Near Trust old girl hostel at some distance new land is purchase (Rs. 1 cr.) and construction work started for new girl hostel.
One person contributed Rs.8 lac for it.
Many other people also contribute some amount.
Trust also have some fund arrangement for baring daily expenses. It is from 100 to 1 lac every day.
One contractor is hired with material but Trust have to pay the material price on the sport by cheque.
Unable to understand what is income/expenses and asset/liability .
What will be its journal entries during construction and after construction in Tally ERP 9 under which GROUP??
Please pass entries of transactions occurring based on date.
Land first
Contributions
Purchase of raw materials
Payables
and clearing payables.
once construction is over, it is an asset recognise or carrying amount of PPE increases. Remember the depreciation rule, an asset is depreciated from the first day it is put to use, similarly, PPE is recognised when it is fully constructed and ready to be put to use. All the best.
CAclubindia
