Booking of Exp more than Income

This query is : Resolved

Jayesh Jagetiya (Querist)
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22 May 2009 Dear Friends,
Our company is Project Based Company.
We have taken a project.
We have given the whole contact to a sub contractor.
we have issued a Sale Bill of Rs. 6 Crore on our client.
The sub contractor has issued a bill of Rs. 7 Crore for the same project.
Can we book the whole Rs. 7 Crore Exp in the F Y 2008-09 or shoule we defer Rs. 1 Crore to next F Y?
The Project will be completed in the F Y 2010-11 & we are expecting overall profit from this.

Manikanta Raju CA,CWA,(CS)

Manikanta Raju CA,CWA,(CS) (Expert)
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22 May 2009 As per AS-7 construction contracts you have to recognise the profit based on percentage completion method, actual receipts and payments does not have any implications