Journal for Contract Accounting
Khalid Masroor (Teacher) (99 Points)
07 April 2019
what is the Journal Entry for cash received for work certified portion
9 Replies
Khalid Masroor
(Teacher)
(99 Points)
Replied 07 April 2019
Then, how is works certified account closed
Khalid Masroor
(Teacher)
(99 Points)
Replied 07 April 2019
is there any difference between work- certified and work- in- progress
CA Shikha Sharma
(Ceo)
(3869 Points)
Replied 07 April 2019
It depends on the user of the terms. I use the term "work-in-process" to mean a manufacturer's inventory that is not yet completed. I think of work-in-process as the goods that are on the factory floor of a manufacturer. The amount of Work-in-Process Inventory would be reported along with Raw Materials Inventory and Finished Goods Inventory on the manufacturer's balance sheet as a current asset.
I use the term "work-in-progress" to mean construction of long term assets (that will be used in the company's business) that are not yet completed. For example, if a company is constructing an addition to its building and the work is only partially completed, the amount spent so far would be recorded as Work-in-Progress, Construction in Progress, or Construction Work-in-Progress (CWIP) and the account would be on the balance sheet as a long-term asset in the section entitled Property, Plant and Equipment. When the project is completed and put into service, the amount would be transferred out of CWIP and would be reported in the account Buildings within Property, Plant and Equipment. At that point, the depreciation of the addition will begin. (If a company is constructing an assembly line or a huge machine that will take time to build, the amounts would also be accumulated in CWIP. When the project is completed and is placed into service, the amount will be transferred from CWIP to Equipment and depreciation will begin.)
To make matters even more complicated, companies producing items under a long-term contract would use an account entitled Construction-in-Process.
Your question points out the need for caution and complete understanding of what the communicator intends. Remember that the sender of a message might not realize that there are important differences between slightly different terms.
🙏🙏🙏🙏took lot of hard work
I use the term "work-in-progress" to mean construction of long term assets (that will be used in the company's business) that are not yet completed. For example, if a company is constructing an addition to its building and the work is only partially completed, the amount spent so far would be recorded as Work-in-Progress, Construction in Progress, or Construction Work-in-Progress (CWIP) and the account would be on the balance sheet as a long-term asset in the section entitled Property, Plant and Equipment. When the project is completed and put into service, the amount would be transferred out of CWIP and would be reported in the account Buildings within Property, Plant and Equipment. At that point, the depreciation of the addition will begin. (If a company is constructing an assembly line or a huge machine that will take time to build, the amounts would also be accumulated in CWIP. When the project is completed and is placed into service, the amount will be transferred from CWIP to Equipment and depreciation will begin.)
To make matters even more complicated, companies producing items under a long-term contract would use an account entitled Construction-in-Process.
Your question points out the need for caution and complete understanding of what the communicator intends. Remember that the sender of a message might not realize that there are important differences between slightly different terms.
🙏🙏🙏🙏took lot of hard work
CA Shikha Sharma
(Ceo)
(3869 Points)
Replied 12 April 2019
not a problem you can ask any no of query
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