Your marketing company has been working on a consulting
project for a client. Your team has worked on the project
for two months, and it is now year-end. The project will be
completed by February of the next year, and the client has
not yet been billed. For the financial statement, how
should project be classified?Should the costs associated
with an uncompleted consulting project be classified as a
work-in-process asset on the balance sheet or should the
cost be expensed on the income statement as a part of the
doing business?why?
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Answer / h.r. sreepada bhagi
As mentioned by Sheril, money spent on the project should be
shown as Work-in-process in the period end Balance Sheet. If
it's charged off to the Profit & Loss A/c in the year of
spending, with our recognising the income associated with,
it will not be in Line with Accrual Concept of Accounting
(Refer the relevant AS issued by ICAI for accounting in
India of the relevant IAS/IFRS (if required for a foreign or
multinational company)
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