07-18-2006, 03:20 AM
<blockquote id="quote"><font size="1" face="Verdana, Tahoma, Arial" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by insaan</i>
<br />Q NO 01
Ias16 y isnt cash discount deducted in computation of cost
whereas Ias specifically mentions to deduct discounts.
Q NO 02
Ias 11 any icidental income(i.e profit) may be reduced
from contract cost;what abt incidental losses?
Q NO 03
watz da Difference B/W cost of sales & COGS
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Answer 1 Purchase price is net of cash discount always. So, the cash discount is already deducted and the asset is booked at net.
Answer 2 First of all get the concept of incidental gains. ABC Construction company has won the contract of destroying the existing building and then erection of new 16 floors building. The company has completely destroyed the old building within 1 month. Afterwards it has started construction of new building. The company has completed its all work within 2 years.
When the company destroyed the building, the management of the company sold the scrap material for Rs x million. Rs X shall be credited to WIP a/c. Furthermore after the completion of contract the company had some surplus material, and the company has following two options for it
(a) To sell the material in market
(b) To use this material on some other contract.
In both of the cases the material shall be credited to WIP A/C with amount for which it is sold/transfered to another contract. In case of sale, sales proceeds shall be credited and gain/loss shall be automatically booked in WIP A/C. In case of transfer, cost of WIP shall be credited resulting in no gain/loss.
Answer 3 Elaborate your question.
<br />Q NO 01
Ias16 y isnt cash discount deducted in computation of cost
whereas Ias specifically mentions to deduct discounts.
Q NO 02
Ias 11 any icidental income(i.e profit) may be reduced
from contract cost;what abt incidental losses?
Q NO 03
watz da Difference B/W cost of sales & COGS
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Answer 1 Purchase price is net of cash discount always. So, the cash discount is already deducted and the asset is booked at net.
Answer 2 First of all get the concept of incidental gains. ABC Construction company has won the contract of destroying the existing building and then erection of new 16 floors building. The company has completely destroyed the old building within 1 month. Afterwards it has started construction of new building. The company has completed its all work within 2 years.
When the company destroyed the building, the management of the company sold the scrap material for Rs x million. Rs X shall be credited to WIP a/c. Furthermore after the completion of contract the company had some surplus material, and the company has following two options for it
(a) To sell the material in market
(b) To use this material on some other contract.
In both of the cases the material shall be credited to WIP A/C with amount for which it is sold/transfered to another contract. In case of sale, sales proceeds shall be credited and gain/loss shall be automatically booked in WIP A/C. In case of transfer, cost of WIP shall be credited resulting in no gain/loss.
Answer 3 Elaborate your question.
