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Valuation of closing work in progress

(Querist) 30 October 2014 This query is : Resolved 
1. A partnership firm comprising business of Builder and Land developer can take the benefit of Accounting Standard 7 “Construction Contracting” and can avail the benefit of Revenue Recognition in valuation of closing work in progress.
2. While valuing closing WIP, can it be added the finance cost (Interest on Capital) and administrative expenses (Remuneration to Partners) since all the partners are working partners.
And also please give the sections, case laws applicable to the case.
Atul (Expert) 30 October 2014
Not generally.
Rajendra K Goyal (Expert) 31 October 2014
Consult your tax adviser.
V R SHROFF (Expert) 31 October 2014
consult ur CA
Dr J C Vashista (Expert) 01 November 2014
CA/Tax consultant may be engaged.
Sudhir Kumar, Advocate (Expert) 01 November 2014
agreed with experts
Anirudh (Expert) 01 November 2014
Accounting Standard 7 relates to cash flow statement. How will it help in showing the WIP in your balance sheet?

Once the interest on capital, administrative expenses have already been shown in your P&L Account as an outgo, how can you again add the same in WIP as well? If you want to do so, would you be reducing from the original figure what now you want to add up in the WIP? In other words, if you want to pad up your WIP by these items, how will you balance it on the other side?
T. Kalaiselvan, Advocate (Expert) 04 November 2014
You may answer the queries raised by expert Mr. Anirudh to solve your query, if you chose not to answer, you may consult a local tax consultant/CA for solving your problems. Case laws are not supplied here.


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