Accounting for income service industry
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
21 January 2011
Can anyone please sugest me how accrual concept of accounting is used for accounting advance received for service industry.
For eg.
Cost of the project : 1000000
Advance reced against project is : 700000
Project completion cannot be measured .
Pls suggest accounting entry
How much income is to be booked on accrual basis of accounting
For eg.
Cost of the project : 1000000
Advance reced against project is : 700000
Project completion cannot be measured .
Pls suggest accounting entry
How much income is to be booked on accrual basis of accounting
21 January 2011
As per AS-7 percentage of completion need to be calculated and accounted
Message likes :
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Querist : Anonymous
Querist :
Anonymous
(Querist)
21 January 2011
But percentange completion cannot be measured
21 January 2011
then no income can be booked and after measurement taken revenue need to be booked and keep the payment received as advance received under current liability
Message likes :
1 times
21 January 2011
70 % of the project cost is received as advance. What did you do with that advance instead of saying "percentange completion cannot be measured". Did you spent any amount ,out of the advance ,towars the project? If so, recognize revene on the percentage of cost incurred to the total cost method, being one of the option given in AS-7.
07 June 2011
Type of services you have not mentioned, however let us assumed this is construction services, in this case you need to follow AS 7 and in this case advance is not relevant, important factor is completion
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