Accounting




January 18, 2008

How do you account for a project under construction?

I will assume that the project under construction is a major rebuilding of equipment or an addition to a building. The amounts spent on these projects would be debited to a long term asset account such as Construction Work in Progress. This account is often reported as the last line within the balance sheet classification Property, Plant and Equipment.

There will be no depreciation until the project is completed and the asset is placed into service. When the completed asset is placed into service, the project’s cost will be removed from the account Construction Work in Progress and will be debited to the appropriate plant asset account.

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Comments

4 Responses to “How do you account for a project under construction?”

  1. Honny on February 8th, 2008 2:29 am

    My question is ” Is a goowill is tangiable asset or factious asset? and what is the difference between tangiable asset and factious asset, and where we placed it in balance sheet. Waiting your reply.

    Thanks

    Fakhar Malik

  2. Shahzad on February 10th, 2008 8:20 am

    How and when good will is calculated?.
    How it is amortized over the period.?

  3. Julio on July 14th, 2008 10:14 am

    Can you guys put more examples of the sheets. Also please put more examples of how to place or classify the notes. Like what falls under PPE or Trade and other receivables etc. But the site is really good!

  4. joy on July 15th, 2008 9:02 am

    is wip recorded as both an asset and a liability.

    Using the CCM

    thanks for your replay

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