Provisional Liability for Profit
This query is : Resolved
17 September 2008
Dear Experts
one of our cliet is engaged in in-house developemnt of residential layout. They are following Percentage Completion Method for recognising revenue. presently the sale proceeds received towards sale of sites is treated as liability in balance sheet and the entire developed land (Including Land Purchase and development) is shown as Closing W.I.P. in B/Sheet. Estimated cost is shown only for development aspect and actual admin cost charged to taxable income. for the balance development cost to be inccured the same is treated as provisional Liability and deducted from Sale Proceeds kept as from customers as well as closing W.I.P.
our doubt is whether the provisional liability shown for feture expenses which is deducted from advance as well as closing W.I.P. is correct? are they suppose to recover TDS on Provisional Liability provided?
Kindly Clarify
Ex: the project is 4 years or more
Area to be Sold - 1000 sft
Estimated Cost - 2000/- for development
Land Cost - 1000/- Actual
in Books actual Development Cost
suppose 1 Yr 250/-
2 Yr 400/-
Sale Proceeds
suppose 1 Yr 500/- 100 sft
2 Yr 750/- 150 sft
how to recognise the revenue and estimated cost liability will create for sold area
one of our cliet is engaged in in-house developemnt of residential layout. They are following Percentage Completion Method for recognising revenue. presently the sale proceeds received towards sale of sites is treated as liability in balance sheet and the entire developed land (Including Land Purchase and development) is shown as Closing W.I.P. in B/Sheet. Estimated cost is shown only for development aspect and actual admin cost charged to taxable income. for the balance development cost to be inccured the same is treated as provisional Liability and deducted from Sale Proceeds kept as from customers as well as closing W.I.P.
our doubt is whether the provisional liability shown for feture expenses which is deducted from advance as well as closing W.I.P. is correct? are they suppose to recover TDS on Provisional Liability provided?
Kindly Clarify
Ex: the project is 4 years or more
Area to be Sold - 1000 sft
Estimated Cost - 2000/- for development
Land Cost - 1000/- Actual
in Books actual Development Cost
suppose 1 Yr 250/-
2 Yr 400/-
Sale Proceeds
suppose 1 Yr 500/- 100 sft
2 Yr 750/- 150 sft
how to recognise the revenue and estimated cost liability will create for sold area
21 June 2023
"Sorry, I am not a featured member."
For featured members contact....
https://www.caclubindia.com/catalogue/featured.asp
For featured members contact....
https://www.caclubindia.com/catalogue/featured.asp
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- REGARDING GST ON COMMERICIAL PROPERTY
- 15ca /15cb whose income tax login? remitter or nri seller's login?
- GST on export of services and Input Credit
- ITC temporary reversal and reclaim
- Regarding Documentation & Compliances for Opening of Unit of Pvt Ltd.
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- TDS U/S. 194NF
- Applicable TDS rate for sale of property in Nov 2024
- REGARDING 25 AS DATE OF PAYMENT AND DATE OF BOOKING
- Payment of bonus act - notice pay recovery
- MIS MATCH OF INVOICE NUMBER
- GST Regis.
- ITC c/f from FY2022-23 to FY2023-24 entered the same in table 8C of GSTR9 of FY 2022-23, in FY23-24
- Late filling fees Demand by gst office
- IGST Credit-Show cause notice issued-confusion
- Short and Excess provision of expenses
- Issue of gst e invoice
- Interchangeable words in accounts
- Adjusted profit/Loss in the case of LLP and Pvt. Ltd.company
Trending Online Classes
CAclubindia
