i have paid an amount of 200,000 as an advance for the mobilisation of work and i have to pay more 100,000 after completion of the draft copy of the project work.
where would the first 200,000 shown in books
as an advance or should it be capitalised
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Doubt
Replies (7)
capitalisation will be done after the receipt of bill from party on paying advance debit advance itself
receipt had been received. but no progress of the work has been notified
Show it as Capital Work-in-progress
show it as capital WIP and after the competion u can capitalise it
Agree with CA Maulik. Show Rs. 200,000/- in Capital WIP and after completion of work transfer Rs. 200,000/- along with payment of Rs. 100,000/- to Fixed Assets.
You have to debit Mobilisation advance a/c only when you pay advance.
Only after getting Running account of the work done duly certified, the same can be taken to WIP and when the work is fully completed the same may be transferred to Fixed asset a/c.
For transferring to Fixed asset a/c you need to get the Installation certificate, as from this date you have to calculate depreciation.
Thanks,
Viswanathan.C.P
thanks to all .
but can u give me the relevant accounting standard or guidelines or any interpretation for the same .....
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