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Doubt

Saurabh Malpani (CA Final) (514 Points)

04 January 2012

i have paid an amount of 200,000 as an advance for the mobilisation of work and i have to pay more 100,000 after completion of the draft copy of the project work.

where would the first 200,000 shown in books

as an advance or should it be capitalised

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7 Replies

sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 04 January 2012

capitalisation will be done after the receipt of bill from party on paying advance debit advance itself

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Saurabh Malpani (CA Final) (514 Points)
Replied 04 January 2012

receipt had been received. but no progress of the work has been notified

CA.Praveen Ponnappa (CA PRactice) (128 Points)
Replied 04 January 2012

Show it as Capital Work-in-progress

CA MAULIK (C.A) (937 Points)
Replied 04 January 2012

show it as capital WIP and after the competion u can capitalise it

CA Kiran Sutrave (CA) (428 Points)
Replied 05 January 2012

Agree with CA Maulik. Show Rs. 200,000/- in Capital WIP and after completion of work transfer Rs. 200,000/- along with payment of Rs. 100,000/- to Fixed Assets.

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Viswanathan.C.P (Manager-Finance and Accounts) (332 Points)
Replied 05 January 2012

You have to debit Mobilisation advance a/c only when you pay advance.

Only after getting Running account of the work done duly certified, the same can be taken to WIP and when the work is fully completed the same may be transferred to Fixed asset a/c.

For transferring to Fixed asset a/c you need to get the Installation certificate, as from this date you have to calculate depreciation.

Thanks,

Viswanathan.C.P