arising out of a grant can be taken to statement of profit and loss. In present case, grant should be shown as Capital Reserve (not revenue reserves) with proper disclosures. If such grant received is credited to profit and loss, profit or loss position could be easily manipulated through such private grants. The following EAC Opinion was found of 1983 which follows the Guidance Note on 'Accounting for Capital Based Grants' issued by the Institute in 1981 which stands withdrawn with the issue of AS 12. As per this Guidance Note, amount may either be (i) deducted from the cost of the specific fixed assets for which the gift was made available, or (ii) kept in a special reserve and a proportionate amount transferred annually to the profit and loss account with reference to the life of the machines. Calculate the Revenue to be booked as per percentage completion method: Total Saleable area 20,000 Sq. ft. Estimated Projected -(comprises land cost of Rs. 300 lakhs & Construction Rs. 600 lakhs costs of Rs. 300 lakhs) Cost incurred till end of reporting period - (This includes land cost of Rs. 300 Rs. 360 lakhs lakhs & Construction costs of Rs. 60 lakhs) Total Area Sold till date of reporting period 5,000 Sq. ft. Sale Consideration as per Agreements of Sale executed Rs. 200 lakhs Amount realized till the end of the reporting period Rs. 50 lakhs % of completion of work -60% of total project cost including land costor20% of total construction cost As per Para 5.3 of Guidance note on Accounting of Real Estate Transaction (Revised 2012) - there is a rebuttable presumption that the outcome of a real estate project can be estimated reliably and that revenue should be recognised under the percentage completion method only when the events in (a) to (d) below are completed. All critical approvals necessary for commencement of the project have been obtained. These include, wherever applicable: Environmental and other clearances.
arising out of a grant can be taken to statement of profit and loss. In present case, grant should be shown as Capital Reserve (not revenue reserves) with proper disclosures. If such grant received is credited to profit and loss, profit or loss position could be easily manipulated through such private grants. The following EAC Opinion was found of 1983 which follows the Guidance Note on 'Accounting for Capital Based Grants' issued by the Institute in 1981 which stands withdrawn with the issue of AS 12. As per this Guidance Note, amount may either be (i) deducted from the cost of the specific fixed assets for which the gift was made available, or (ii) kept in a special reserve and a proportionate amount transferred annually to the profit and loss account with reference to the life of the machines. Calculate the Revenue to be booked as per percentage completion method: Total Saleable area 20,000 Sq. ft. Estimated Projected -(comprises land cost of Rs. 300 lakhs & Construction costs of Rs. 300 lakhs) Rs. 600 lakhs Cost incurred till end of reporting period - (This includes land cost of Rs. 300 lakhs & Construction costs of Rs. 60 lakhs) Rs. 360 lakhs Total Area Sold till date of reporting period 5,000 Sq. ft. Sale Consideration as per Agreements of Sale executed Rs. 200 lakhs Amount realized till the end of the reporting period Rs. 50 lakhs % of completion of work -60% of total project cost including land costor20% of total construction cost As per Para 5.3 of Guidance note on Accounting of Real Estate Transaction (Revised 2012) - there is a rebuttable presumption that the outcome of a real estate project can be estimated reliably and that revenue should be recognised under the percentage completion method only when the events in (a) to (d) below are completed. All critical approvals necessary for commencement of the project have been obtained. These include, wherever applicable: Environmental and other clearances.
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