06-04-2006, 04:42 AM
Ohh.. I feel my question was a bit vague
Let me elaborate with an example
A. the contract is fixed price contract
B. according to companyâs policy certification of work has prime importance in computing interim profits on a contract in progress
Contract price = Rs.750000
Work certified = Rs. 487500
Cost to date = Rs.470000
Further estimated expenditure = Rs.227000
Solution
Total estimated profit on this contract = 750000-697000=Rs.53000
Profit to be credited to P/L = 53000*(487500/750000) =Rs.34450
Now
W.I.P = 487500 â¦â¦â¦â¦ (1)
Or
W.I.P = 470000+34450 =504450 â¦â¦â¦. (2)
According 2 javed zuberi W.I.P = Rs.504450 and he would treat the work certified figure as progress billing and the balance i.e. Rs 16950 as due from customer
Whereas according to our teacher W.I.P = Rs 487500
Here, <b>which</b> treatment is correct and <b>why?</b>
Let me elaborate with an example
A. the contract is fixed price contract
B. according to companyâs policy certification of work has prime importance in computing interim profits on a contract in progress
Contract price = Rs.750000
Work certified = Rs. 487500
Cost to date = Rs.470000
Further estimated expenditure = Rs.227000
Solution
Total estimated profit on this contract = 750000-697000=Rs.53000
Profit to be credited to P/L = 53000*(487500/750000) =Rs.34450
Now
W.I.P = 487500 â¦â¦â¦â¦ (1)
Or
W.I.P = 470000+34450 =504450 â¦â¦â¦. (2)
According 2 javed zuberi W.I.P = Rs.504450 and he would treat the work certified figure as progress billing and the balance i.e. Rs 16950 as due from customer
Whereas according to our teacher W.I.P = Rs 487500
Here, <b>which</b> treatment is correct and <b>why?</b>