Owner cum builder--> ACCOUNTING STANDARD 9--> advance receipt for booking

This query is : Resolved

naresh (Querist)
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22 October 2022 owner-builder is a pvt ltd co. suppose only 1 sale deed is excuted out of 20 flats (building is still under construction, about 60% completed).

Is advance collected from customers on various stages of completion then whether there is any need to follow percentage completion method? (gst is paid correctly on advances, so this queation is not of gst but of accunting)

my view--> as sale deed of 19 flats are not executed only advance is received, advance will be shown as liability and no need to credit to prof loss for these 19 flats

for one flat which is executed--> 60% of its sale value will be credited to prof.loss.
am i wrong?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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22 October 2022 Most of the times advances from customers are collected on various stages of construction along with GST. In such cases the transaction is said to be have executed based on allotment letter or unregistered agreement, while the final registration formality might have been pending for some reason/s.
In every such cases the payment is considered based on completion method and included in sell i.e credited to P&L acc.