07-18-2006, 02:56 AM
<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
<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
