IAS-11 Queires!

[nabeelanwer]

Friends i got a confusion please help me.
1- What is difference between Contract Account, Contract WIP and Contract P & L A/c ?

2- What would be the treatment for Closing Raw Material Stock in Contract WIP A/C and should it be presented in balance sheet , please explain in detail.

Regards

[rememberence]

<blockquote id="quote"><font size="1" face="Verdana, Tahoma, Arial" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by nabeelanwer</i>
<br />Friends i got a confusion please help me.
1- What is difference between Contract Account, Contract WIP and Contract P & L A/c ?

2- What would be the treatment for Closing Raw Material Stock in Contract WIP A/C and should it be presented in balance sheet , please explain in detail.

Regards
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">

The topic is already discussed comprehensively on this forum. Click on the following link

http//www.accountancy.com.pk/forum/topic.asp?topic_id=3844

[nabeelanwer]

my question 2 is still pending, please help
Q- What would be the treatment for Closing Raw Material Stock in Contract WIP A/C and should it be presented in balance sheet , please explain in detail.
As per Zubairi, Closing Raw Material will be C/F in Contract WIP A/C . While our teacher suggested that Closing Raw Material will not C/F!
Please, guide me what would be the right treatment.

[rememberence]

<blockquote id="quote"><font size="1" face="Verdana, Tahoma, Arial" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by nabeelanwer</i>
<br />my question 2 is still pending, please help
Q- What would be the treatment for Closing Raw Material Stock in Contract WIP A/C and should it be presented in balance sheet , please explain in detail.
As per Zubairi, Closing Raw Material will be C/F in Contract WIP A/C . While our teacher suggested that Closing Raw Material will not C/F!
Please, guide me what would be the right treatment.
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">

Refer para 27 of IAS 11. It states that

"A contractor may have incurred contract costs that relate to future activity(in ur case closing stock of raw material) on the contract. Such contract costs are <b>recognized as an asset</b> provided it is probable that they will be recovered. Such costs represent an amount due from the customer and are often classified as contract <b>work in progress</b>."

Amount due from customer is the net amount of
(a)costs incurred to date(actual costs, and this cost may not tally with the cost which you have used to calculate stage of completion, because for stage of completion purpose we take only recognized cost i.e inrespect of rendered or consumed material) +recognized profits
(b)less progress billings

Hope ur query is answered now

[nabeelanwer]

it means we will not show closing stock at Cr. side of Contract WIP A/c as c/f of wip contains work uncertified as well!

[rememberence]

Na na...Amount due from customer n WIP r same. The movement of amount due from customer n WIP is itself explanatory. Like, actual costs incurred (recognized n unrecgnized) + profits recognized-progress billings=amount due from custmer or WIP or balance of uncertified work or unconsumed material or closing stock of raw material.

[rememberence]

ya u r right. balance of WIP shall be itself made up of closing raw material n other unconsumed material.

[nabeelanwer]

ok it got it!, thanks and regards