Contract Costing

Requirements: 1. Contract Account 2. Contractee’s Account 3. Costing Profit & Loss Account( If given Profit on Sale of material or loss on sale of material, Material or Plant loss by accident in question) 4. Balance Sheet Necessary Working: 1. % of work certified on Contract value 2. Calculation of profit to be taken to Income statement/ Profit & Loss A/C 3. Cash Received 4. Value of Work Certified 5. Value of Uncertified work 6. Valuation Work-In-progress 7. Calculation of Depreciation 8. Progress payment

WORKING FORMULA 1. % Of Work certified on Contract Value =

   

× 100

2. Cash Received = Work Certified - Retention money 3. Value of Work Certified =

     

4. Valuation Work-In-progress:

× 100

Cost of work done Add: Profit Less: Cash receive

Or

Cash Receive + Retention money

000 000 000 000 000

5. Profit Determination of Contract:  When the Percentage of work certified on contract value is less than 25%: No profits transferred to profit and loss account/ Income statement than total amount will be PROVISION.  When the Percentage of work certified on contract value is 25% but less than 50% :





 

× Notional Profit ×

   

When the Percentage of work certified on contract value is 50% but less than 100% : 



Profit =

Profit =

 

× Notional Profit ×

   

In case of loss: The entire loss to be transferred to Income Income statement/Profit statement/Profit & Loss Account.

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6. Calculation of Depreciation = 7. Value of Uncertified work:

   

Total Cost to date Less: Cost of Work Certified Materials on hand Plant at site

000 000 000 000 000 8. Progress Payment = Value of work certified - Retention money -Payment mode to date

Name of company . . . . . . . Contract Account Dr. For the year ended 31 st Dec 2011 Particular Taka Particular Materials: Closing or Ending Materials Purchase 000 Materials on hand From store 000 Material return to store From other contract 000 000 Material return from site All expense 000 Materials supplied to other Wages, Labor, Salary expense 000 contract Depreciation exp on Assets 000 Materials lost by accident General exp,Sundry exp,Direct exp 000 Salvage value of wastage Other exp, Overhead exp, Rent exp 000 Destroyed by fire Miscellaneous exp, Hire of crane 000 All Abnormal loss in plant & Share of general overhead 000 Materials Management exp,Sub contract exp 000 Defective work, Indirect exp Supervisors salary, Engineer 000 salary, Provision for sub contract 000 Provision for rectification 000 Architect fee, Hire of plant Establishment exp, Overhead absorbed, Materials delivered to 000 site Machinery installed at site, Plant 000 installed cost Cost of work done c/d 000 Cost of work done done b/d Notional Profit:

000

Work certified Uncertified Work

Cr. Taka 000 000 000 000 000 000 000 000 000

000 000 000 000



Contractee’s Account

Particulars Work certified

Taka 000

Particulars Cash receive Balance c/d

000

Taka 000 000 000

Profit & Loss Account Particulars Material loss by accident Balance c/d

Taka 000 000 000

Particulars Profit on contract Profit on sale of material

Taka 000 000 000

Balance sheet As at 31st Dece. 2011 Liabilities Liabiliti es Share Capital Sundry Creditors/Accounts payable All Advance Income/Received All Accrued exp/Payable Bills payable/ Notes payable Depreciation Provision/ Accumulated Depreciation

Taka 000 000 000 000 000 000

Profit & Loss Account Less: Abnormal loss

000 000 000 Add: Profit on sales of of Assets 000

Assets Fixed Assets, Plant & Machinery Furniture & Building, Tools All Prepared & Advance Exp/payable All Accrued Income/ Receivable Debtors/ Accounts Receivable Bills Receivable/ Notes receivable Salvage value Debtor balance of profit & loss A/C Work- In- Progress

Taka 000 000 000 000 000 000 000 000 000

000 000

000



wKQz cÖ‡qvRbxq Z_¨ 

Loss by Accident: Loss by Accident _vK‡j †Kvb Salvage value bv _vK‡j Dnv Contract A/C Gi  w`‡K em‡e Ges Balance sheet Gi `v‡qi w`‡K Profit n‡Z we‡qvM n‡e|

†µwWU

Loss by Accident _vK‡j Ges Salvage value _vK‡j Dnv Contract A/C Gi †µwWU w`‡K em‡e Ges Balance sheet Gi m¤úwËi w`‡K em‡e| Loss by Accident n‡Z Salvage value ev` w`‡q cÖK…Z ¶wZ †ei Ki‡Z n‡e hv bv‡g Contract A/C Gi †µwWU w`‡K em‡e Ges Balance sheet Gi `v‡qi w`‡K Profit n‡Z we‡qvM n‡e|





Materials Sold with Profit: †Kvb Materials jv‡f weµq weµq Ki‡j ïaygvÎ ïaygvÎ jv‡fi AskUzKz AskUzKz Balance sheet Gi `v‡qi w`‡K Profit Gi mv‡_ †hvM n‡e| Materials Gi cÖK…Z µqg~j¨ Materials Sold (Cost) bv‡g Contract A/C †µwWU w`‡K em‡e|



Materials Sold with Loss: †Kvb Materials ¶wZ‡Z weµq Ki‡j ïaygvÎ ¶wZi ¶wZi AskUzKz Balance sheet Gi `v‡qi w`‡K Profit n‡Z we‡qvM n‡e| Materials Gi cÖK…Z Contract A/C †µwWU

w`‡K em‡e|

Bnv Balance sheet Gi m¤úwËi w`‡K Plant n‡Z we‡qvM Ges Avevi m¤úwËi w`‡K Avjv`v em‡e|



Plant Return to store: Plant Return to Store



Unused Plant Depreciation: 



Plant hw` Contract A/C G eënvi bv nIqv m‡Ë¡ I Depreciation ai‡Z e‡j Z‡e H Depreciation Balance sheet Gi `v‡qi w`‡K Profit n‡Z we‡qvM n‡e| Balance sheet Gi m¤úwËi

w`‡K mswk-ó Plant n‡Z we‡qvM n‡e| As‡K Depreciation Provision _vK‡j AeëüZ AeëüZ Plant Gi Depreciation Balance sheet Gi `v‡qi w`‡K Profit n‡Z we‡qvM Ges Depreciation Provision Gi mv‡_ †hvM n‡e | m¤úwËi w`‡K Plant n‡Z we‡qvM w`‡Z n‡e bv |

Contract Costing

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