What is mean by "Capital working in progress",Sir we are having scropion plant (C&S) in Karnataka working fine last 3 years know also working condition but market is down so our plant is idle since 2 years. our head office accounts persons told me all vouchers put in to "CAPITAL WORKING PROGRESS" WHY?
31 October 2012
If the asset has been running for some years, it means the asset were commissioned i.e. removed from CWIP and added to the fixed asset register. Now, if the plant is idle due to internal or external factors then you should test the plant for impairment (under AS 28) and the resulting impairment loss, if any should be charged to the income statmenet. There is no ratinale for downgrading and treating at CWIP which is illogical and against the basic accounting principles.
CAclubindia
