Valuation of work in process

Others 283 views 2 replies

SANJAY MERCHANT

PROPRIETOR

86 Points Posted on 02 October 2019

My client is engaged in the business of site excavation and clearance i. e. excavating earth to lay the foundation of a building. He bills his customers in proportion to the soil excavated. He has billed his customer upto 15th March for the soil excavated till then. For the balance 16 days, he has valued his work in process at work order rates agreed with his customers. What should be the method of valuation? Is this correct?
Thanks
Sanjay

Replies (2)

sabyasachi mukherjee

Profession Business

28207 Points Posted on 03 October 2019

Yes
work in progress shall be computed as per existing provisions derailed inAS 10.
The work order rates are taken for valuation as per current periods cost.
lifo method.

Kapadia Pravin

17264 Points Posted on 03 October 2019

@ Sanjay

As per your query soil is excavated during March for 16 days but has not been billed to customer or soil being excavated.

You may value it at work order rate as reduced by your average profit margin and pending labour cost to be incurred for under excavation soil. This will enable reaching to WIP value @ the year end.
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IND AS 2 is for Inventories
IND As 2 does not apply to WIP arising under construction contracts including directly related service contracts
I think IND AS2 won't apply.
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Note (for previous reply by ____)
AS 10 is not for WIP.???
Lifo method ???
Work order rates taken for valuation ...???
!!!!
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