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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › PPE capital work-in-progress
May I know on the recognition method and treatments such as depreciation for capital work-in-progress?
Initial measurement
One of the costs for the measurement is PPE’s purchase price. If the purchaser pays the seller in stages that may be based on the progress of the work or other criteria, then how to recognise this payment method?
And if possible can you please provide me the link to the relevant documents for this?
Thanks
On receipt of a progress invoice from the contractor, the customer will:
Dr TNCA in progress
Cr Contractor
and will pay that amount (possibly reduced by a percentage retention that will be payable on completion ,,, or after a period of time following completion)
Dr Contractor
Cr Cash
NO depreciation will be charged because that asset in progress is not contributing neither to revenue nor to profits
OK?