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Construction contract

778 views 3 replies

shalu gupta

student

70 Points Posted on 18 October 2012

x ltd. undertook a contarct to contract a building for rs.3 cr. on 1st sep,11 . on 31st march,12 the co. found that it had already spent rs. 1 cr 80 lakhs on the constrution . prudent estimate of additional cost for completion was rs 1 cr. 40 lakh. . what amt should be charged , to revenue in the final accounts for the year ended on 31st, 2012 , as per the provisions of accounting stndrd 7 " constution contract revised" ???

in this i m not abl?e to find the degree of completion..??/

Replies (3)

sreenath

Articled Assistant

219 Points Posted on 18 October 2012

Degree of Completion= work done upto the date/Total Estimated cost for the Project*100

1.80Cr/3.2Cr*100=56.25%

Revenue should be recognised in the Books =3cr*56.25=1.6875Cr

Loss 1.8cr-1.6875Cr=0.1125Lakhs

shalu gupta

student

70 Points Posted on 19 October 2012

can u plz xplain me how u got 3.2 cr

know your self

knowledge is power of student

98 Points Posted on 20 October 2012

@ sreenath can you explain what you have done

As per my opinion:-

If in the year end of 31st mar 2012 there is a notional profit(i.e. cr. balance in contract a/c ) and expected loss at end of contract (i.e. contract price 3cr and total expences is 3.2cr) then you shoul not recognized any profit just make only contingency reserve

sreenath

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